Document:

Exhibit 10.171

 

 

 

 

Blue
Shield of California

 

HMO

IPA /
MEDICAL GROUP

SHARED
SAVINGS PROVIDER

AGREEMENT

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

1

 

HMO IPA /
MEDICAL GROUP

SHARED
SAVINGS PROVIDER AGREEMENT

TABLE OF
CONTENTS

 

	
  SECTION

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  I.

  	
   

  	
  DEFINITIONS

  
	
  1.1

  	
   

  	
  Agreement Year

  
	
  1.2

  	
   

  	
  Authorization

  
	
  1.3

  	
   

  	
  Benefit Program

  
	
  1.4

  	
   

  	
  Blue
  Shield Providers

  
	
  1.5

  	
   

  	
  Capitated Professional
  Services

  
	
  1.6

  	
   

  	
  Capitation

  
	
  1.7

  	
   

  	
  Co-payments

  
	
  1.8

  	
   

  	
  Covered
  Services

  
	
  1.9

  	
   

  	
  Emergency
  Services

  
	
  1.10

  	
   

  	
  Evidence
  of Coverage

  
	
  1.11

  	
   

  	
  Group Provider

  
	
  1.12

  	
   

  	
  Group
  Services Area

  
	
  1.13

  	
   

  	
  Health
  Services Contract

  
	
  1.14

  	
   

  	
  Medically
  Necessary

  
	
  1.15

  	
   

  	
  Member

  
	
  1.16

  	
   

  	
  Primary Care Physician

  
	
  1.17

  	
   

  	
  Provider Manual

  
	
  1.18

  	
   

  	
  Shared
  Risk Services

  
	
  1.19

  	
   

  	
  Urgent
  Care Services

  
	
   

  	
   

  	
   

  
	
  II.

  	
   

  	
  OBLIGATIONS
  OF GROUP

  
	
  2.1

  	
   

  	
  Capitated Professional
  Services

  
	
  2.2

  	
   

  	
  Referrals for
  Other Covered Services

  
	
  2.3

  	
   

  	
  Availability

  
	
  2.4

  	
   

  	
  Standards for Provision
  of Care

  
	
  2.5

  	
   

  	
  Providers Not Meeting
  Standards

  
	
  2.6

  	
   

  	
  Group
  Service Contracts

  
	
  2.7

  	
   

  	
  Quality
  Improvement / Case Management / Utilization Management Programs

  
	
  2.8

  	
   

  	
  Right to Re-Assign Members

  
	
  2.9

  	
   

  	
  Outpatient
  Drug Formulary and Pharmacy Information

  
	
  2.10

  	
   

  	
  Reciprocity

  
	
  2.11

  	
   

  	
  Termination
  of Physician / Patient Relationship

  
	
  2.12

  	
   

  	
  Encounter Data and
  Other Reporting

  
	
  2.13

  	
   

  	
  Disclosures

  
	
  2.14

  	
   

  	
  Direct
  Access Programs

  
	
  2.15

  	
   

  	
  Addition of New
  Plan Benefit Programs

  

 

2

 

	
  SECTION

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  III.

  	
   

  	
  PAYMENT OF PROVIDERS BY
  GROUP

  
	
  3.1

  	
   

  	
  Timely
  Group Payment

  
	
  3.2

  	
   

  	
  Failure
  to Make Payment

  
	
   

  	
   

  	
   

  
	
  IV.

  	
   

  	
  PERFORMANCE OF
  DELEGATED FUNCTIONS

  
	
  4.1

  	
   

  	
  Delegation

  
	
  4.2

  	
   

  	
  Blue Shield of
  California Monitoring and Oversight

  
	
  4.3

  	
   

  	
  Termination of Delegation

  
	
   

  	
   

  	
   

  
	
  V.

  	
   

  	
  OBLIGATIONS OF BLUE SHIELD
  OF CALIFORNIA

  
	
  5.1

  	
   

  	
  Directory and Use of Names

  
	
  5.2

  	
   

  	
  Provider Manual

  
	
  5.3

  	
   

  	
  Blue
  Shield of California Reports

  
	
  5.4

  	
   

  	
  Administrative
  Services

  
	
   

  	
   

  	
   

  
	
  VI.

  	
   

  	
  ELIGIBILITY OF BLUE
  SHIELD OF CALIFORNIA MEMBERS

  
	
  6.1

  	
   

  	
  Identification
  Cards and Verification

  
	
  6.2

  	
   

  	
  Verification of Eligibility

  
	
  6.3

  	
   

  	
  Eligibility List and
  Modifications

  
	
   

  	
   

  	
   

  
	
  VII.

  	
   

  	
  COMPENSATION AND FINANCIAL
  TERMS

  
	
  7.1

  	
   

  	
  Capitation
  Payments

  
	
  7.2

  	
   

  	
  Services
  Other Than Capitated Professional Services

  
	
  7.3

  	
   

  	
  Co-payments

  
	
  7.4

  	
   

  	
  Stop Loss
  Coverage

  
	
  7.5

  	
   

  	
  Shared
  Risk Programs

  
	
  7.6

  	
   

  	
  Blue Shield POS Benefit
  Program

  
	
  7.7

  	
   

  	
  Third Party
  Liens

  
	
  7.8

  	
   

  	
  Groups Organized
  by Geographic Regions

  
	
  7.9

  	
   

  	
  Purpose of Incentive
  Programs

  
	
  7.10

  	
   

  	
  Blue Shield of
  California Timeliness Guarantee

  
	
  7.11

  	
   

  	
  Encounter Data
  Submission Penalties

  

 

3

 

	
  SECTION

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  VIII.

  	
   

  	
  PROTECTION OF MEMBERS

  
	
  8.1

  	
   

  	
  Non-Discrimination

  
	
  8.2

  	
   

  	
  Credentialed
  Providers

  
	
  8.3

  	
   

  	
  Charges to
  Members

  
	
  8.4

  	
   

  	
  Protection of Members

  
	
  8.5

  	
   

  	
  Benefits
  Determination

  
	
  8.6

  	
   

  	
  Member Complaints and
  Grievances

  
	
  8.7

  	
   

  	
  Medical Necessity
  Assistance

  
	
  8.8

  	
   

  	
  Free Exchange of
  Information

  
	
  8.9

  	
   

  	
  Insurance

  
	
   

  	
   

  	
   

  
	
  IX.

  	
   

  	
  MEDICAL RECORDS
  AND CONFIDENTIALITY

  
	
  9.1

  	
   

  	
  Medical Records

  
	
  9.2

  	
   

  	
  Confidentiality

  
	
  9.3

  	
   

  	
  Member
  Access to Records

  
	
   

  	
   

  	
   

  
	
  X.

  	
   

  	
  COOPERATION
  WITH AUDITS AND CERTIFICATIONS

  
	
  10.1

  	
   

  	
  Disclosure
  of Records

  
	
  10.2

  	
   

  	
  Site
  Evaluations

  
	
  10.3

  	
   

  	
  Accreditation
  Surveys

  
	
  10.4

  	
   

  	
  Compliance
  Monitoring

  
	
   

  	
   

  	
   

  
	
  XI.

  	
   

  	
  RESOLUTION OF DISPUTES

  
	
  11.1

  	
   

  	
  Provider Dispute
  Resolution Procedure

  
	
  11.2

  	
   

  	
  Arbitration
  of Disputes

  
	
  11.3

  	
   

  	
  Cooperation with
  Member Disputes

  
	
   

  	
   

  	
   

  
	
  XII.

  	
   

  	
  TERM AND TERMINATION

  
	
  12.1

  	
   

  	
  Term

  
	
  12.2

  	
   

  	
  Termination Without Cause

  
	
  12.3

  	
   

  	
  Termination
  for Cause

  
	
  12.4

  	
   

  	
  Notice
  and Cure Period

  
	
  12.5

  	
   

  	
  Termination Not an
  Exclusive Remedy

  
	
  12.6

  	
   

  	
  Effect
  of Termination

  
	
   

  	
   

  	
   

  

 

4

 

	
  SECTION

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  XIII.

  	
   

  	
  COMPLIANCE WITH
  LEGAL REQUIREMENTS

  
	
  13.1

  	
   

  	
  Consistency with State Law

  
	
  13.2

  	
   

  	
  Consistency with Federal
  Law

  
	
  13.3

  	
   

  	
  Coordination
  of Benefits

  
	
  13.4

  	
   

  	
  Timely Payment

  
	
  13.5

  	
   

  	
  Disclosure of Provider
  Profiling

  
	
  13.6

  	
   

  	
  Provider
  Terminations

  
	
   

  	
   

  	
   

  
	
  XIV.

  	
   

  	
  GENERAL PROVISIONS

  
	
  14.1

  	
   

  	
  Waiver of
  Breach

  
	
  14.2

  	
   

  	
  Amendments

  
	
  14.3

  	
   

  	
  Entire
  Agreement

  
	
  14.4

  	
   

  	
  Independent
  Contractors

  
	
  14.5

  	
   

  	
  Notices

  
	
  14.6

  	
   

  	
  Third Party Beneficiaries

  
	
  14.7

  	
   

  	
  Assignment, Subcontracting,
  and Addition of PCP’s

  
	
  14.8

  	
   

  	
  Interpretation of Agreement

  
	
  14.9

  	
   

  	
  Confidentiality / Trade
  Secrets

  
	
  14.10

  	
   

  	
  Non-Solicitation

  
	
  14.11

  	
   

  	
  Association
  Disclosure 

  
	
   

  	
   

  	
   

  
	
  EXHIBITS

  	
   

  	
   

  
	
  A

  	
   

  	
  Group Information and
  Benefits Programs

  
	
  B

  	
   

  	
  Division of Financial
  Responsibilities

  
	
  C

  	
   

  	
  Capitation

  
	
  C-1

  	
   

  	
  Capitation Rates

  
	
  D

  	
   

  	
  Shared Savings Programs

  
	
  D-l

  	
   

  	
  Shared Savings Fund
  Allocations

  
	
  D-2

  	
   

  	
  Shared Savings Fund Allocations
  – Blue Shield 65 Plus

  
	
  D-3

  	
   

  	
  Pharmacy Shared Savings
  Fund Allocations

  
	
  E

  	
   

  	
  Blue Shield of California
  Allowable Rates

  
	
  F

  	
   

  	
  Delegation Responsibilities

  
	
   

  	
   

  	
  •

  	
  Attachment
  I – Quality Management Requirements

  
	
   

  	
   

  	
  •

  	
  Attachment II – Utilization
  Management Requirements

  
	
   

  	
   

  	
  •

  	
  Attachment III –
  Credentialing / Delegation Requirements

  
	
   

  	
   

  	
  •

  	
  Attachment IV – Claims
  Processing Requirements 

  
	
  G-1

  	
   

  	
  Blue Shield 65 Plus
  Program

  
	
  G-2

  	
   

  	
  Blue Shield POS
  Provisions

  
	
  H

  	
   

  	
  Professional Stop Loss
  Program

  

 

5

 

HMO IPA /
MEDICAL GROUP

SHARED SAVINGS PROVIDER AGREEMENT

 

This Agreement is entered into between Prospect Health Source Medical Group, a California corporation
(hereinafter “Group”), and California
Physicians’ Service, Inc., d.b.a., Blue Shield of California, a
California nonprofit corporation (hereinafter “Blue Shield”).  The Effective Date of this Agreement is July 1, 2003.

 

RECITALS

 

A.                                   Blue Shield is licensed as a prepaid health
care service plan under the Knox-Keene Act of 1975 (“the Knox-Keene Act”);

 

B.                                     Blue Shield contracts with individuals,
employer groups and governmental entities to provide or to arrange for the
provision of covered HMO health care services to Members of Blue Shield;

 

C.                                     Group is organized as a legal entity as
identified immediately following Group’s signature on this Agreement and is
licensed and qualified to provide or arrange for the delivery of medical
services to Members of Blue Shield, either directly or through contracting
providers;

 

D.                                    Group and Blue Shield desire that Group
provide or arrange for the delivery of services to Members in accordance with
the terms of this Agreement;

 

E.                                      Except as specifically noted, this Agreement
is applicable to members enrolled under Blue Shield’s HMO Benefit Programs set
forth in Exhibit A, attached hereto. 
This Agreement shall only apply to Medicare beneficiaries enrolled in
Blue Shield’s Medicare+Choice program (“Blue Shield 65 Plus”) if such program
is specifically identified in Exhibit A. 
It is not intended to and does not supersede or amend any other agreement
under which Group or Group Providers provide professional services to Blue
Shield’s PPO Members.

 

6

 

I.  DEFINITIONS

 

For
the purposes of this Agreement, terms shall have the following meanings:

 

1.1                                 Agreement Year:
is the twelve month period beginning at 12:01 a.m. on the Effective Date of
this Agreement, and on each anniversary of the Effective Date.

 

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

 

1.3                                 Benefit Program: is a group or individual prepaid HMO benefit program offered by Blue
Shield through health services contracts (and riders thereto).  The Benefit Programs to which this Agreement
applies are set forth in Exhibit A, hereto.

 

1.4                                 Blue
Shield Providers(s): are those licensed healthcare providers,
including acute care hospitals (“Blue Shield Hospitals”), which have entered
into agreements with Blue Shield to provide Covered Services to Members.

 

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

 

1.6                                 Capitation:  is the monthly payment made by Blue Shield
to Group pursuant to Exhibit C, hereto, which payment, along with applicable
Co-payments, is payment in full for all Capitated Professional Services to
Members.

 

1.7                                 Co-payments:
refers to any co-payments, deductibles, and coinsurance which are specifically
described as the financial responsibility of the Member for a Covered Service
in the applicable Health Services Contract and/or Evidence of Coverage in
effect as of the date of service.  Any
other amount which Group or Group Provider may seek to recover from Members for
Covered Services constitutes a surcharge and is prohibited by both this
Agreement and by the Knox-Keene Act.

 

1.8                                 Covered
Services: are the Medically Necessary healthcare
services which a Member is entitled to receive pursuant to the Health Services
Contract and Evidence of Coverage applicable to the Member.  Except as otherwise provided in the Member’s
Health Services Contract and Evidence of Coverage, Covered Services must
generally be referred and authorized in conformity with the Group’s and Blue
Shield’s Utilization Management program.

 

7

 

1.9                                 Emergency
Services: are Covered Services to address a medical
condition manifesting itself by acute symptoms of sufficient severity
(including severe pain) so  as to
cause the prudent layperson to conclude that the absence of immediate medical
attention could reasonably be expected to result in: (i) placing the Member’s
health in serious jeopardy; (ii) serious impairment to bodily functions; (c)
serious dysfunction of any bodily organ or part.  For Blue Shield 65 Plus Members, Emergency Services also include
any other services defined as emergency services in 42 C.F.R. §422.2.

 

1.10                           Evidence of
Coverage: is the document issued to the Member
pursuant to California law which describes the benefits, limitations and other
features of the Benefit Program in which the Member is enrolled.

 

1.11                           Group Provider: is a physician (“Group Physician”),
ancillary provider, or other provider with whom Group has entered into a
contract for the provision of Capitated Professional Services.

 

1.12                           Group Service
Area: is that aggregate geographic area
determined by and located within a thirty (30) mile radius from Group’s
designated participating hospitals and including all zip codes containing a
participating PCP facility.  A PCP
facility refers to the Group’s principal and satellite offices, if an
integrated medical group, and to the offices of each of its contracted or
employed PCPs, if an IPA or medical foundation.  The zip codes describing the location of Group’s PCP facilities
are set forth in Exhibit A., attached hereto. 
If subsequent to the Effective Date of this Agreement, Group adds a new
PCP, the Service Area and zip code list in Exhibit A, shall be automatically
amended if necessary to include the zip code in which the PCP facility is
located.  The Group Service Area shall
be  used to determine in-area from
out-of-area services and to proscribe the maximum area in which Member’s who
select a Group PCP must live or work.

 

1.13                           Health
Services Contract: is the group or individual contract,
applicable to the Member, which sets forth the Benefit Program and the Covered
Services to which the Member is entitled, as well as the Member’s Co-payment
obligation.

 

1.14                           Medically
Necessary: services or supplies means those medical
services and supplies which are provided in accordance with recognized
professional medical and surgical practices and standards which are determined
to be: (a) appropriate and necessary for the symptoms, diagnosis or treatment
of the Member’s medical condition; and (b) provided for the diagnosis and
direct care and treatment of such medical condition; and (c) not furnished primarily
for the convenience of the Member, the Member’s family, or the treating
provider or other provider; and (d) furnished at the most appropriate level
which can be provided consistent with generally accepted medical standards of
care; and (e) consistent with Blue Shield Medical Policy.

 

8

 

1.15                           Member: is
an individual who is, according to Blue Shield’s rules and policies, eligible
for and enrolled (or otherwise covered by Blue Shield as a newborn) in a Blue
Shield Benefit Program described in Exhibit A., and who has selected or been
assigned (either prospectively or retroactively) to a Group Primary Care
Physician as his/her primary care physician. 
Blue Shield retains final authority to determine whether an individual
is or is not a Member assigned to a Group PCP.

 

1.16                           Primary
Care Physician (PCP): is a family practitioner, general
practitioner, internist, or pediatrician who has been employed or contracted by
Group to provide primary care services to Members and to be responsible for
coordinating, referring, and managing the delivery of Covered Services to the
Member.  A PCP shall include an
obstetrician-gynecologist who is qualified and has agreed with Group to serve
as a PCP, and may also include other specialists if approved in writing by Blue
Shield.

 

1.17                           Provider Manual: refers to the manuals developed by Blue Shield which set forth the
operational rules and procedures applicable to the Group and Group
Providers.  The Provider Manual will
include the HMO Provider Manual, the HMO Benefit Guidelines and the Blue Shield
Medical Policy Manual.

 

1.18                           Shared
Savings Services: refer to the Covered Services which are not
Capitated Professional Services and as to which the Group and Blue Shield share
financial responsibility under the Shared Savings Settlement set forth in
Exhibit B.

 

1.19                           Urgent Care
Services: are those Covered Services (other than
Emergency Services) which are Medically Necessary to prevent serious
deterioration of a Member’s health, alleviate severe pain, or treat an illness
or injury with respect to which treatment can not reasonably be delayed.  For Blue Shield 65 Plus Members, Urgent Care
Services, at a minimum, include all services which are defined by Center for
Medicare and Medicaid Services (CMS) as “Urgently Needed Services”.

 

II.  OBLIGATIONS OF
GROUP

 

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

 

9

 

2.2                                 Referrals
For Other Covered Services.

 

(a)                                  Subject to applicable Authorization
requirements set forth in the Provider Manual, Group shall, as Medically
Necessary, refer Members to Blue Shield Providers (including Blue Shield
Hospitals) for those services which are Covered Services but which are not
Capitated Professional Services.  Upon
and following such referral, Group shall coordinate the provision of such Covered
Services to Members and ensure continuity of care.

 

(b)                                 Group shall utilize the organ transplant
provider network established by Blue Shield for the provision of selected organ
transplants.  Blue Shield shall, from
time to time, designate which transplant centers are to be utilized for
specified transplants.

 

(c)                                  In addition, upon notice by Blue Shield to
Group that Blue Shield has developed other specialty networks for the provision
of Covered Services that are not Capitated Professional Services, Group shall
utilize such applicable specialty network(s) for the provision of such services
to Members, unless (except for the organ transplant provider network referred
to above) Group demonstrates to Blue Shield’s reasonable satisfaction that
Group Providers are able to offer comparable services of comparable quality and
cost effectiveness to the services to be offered by Blue Shield’s specialty
network.

 

2.3                                 Availability.

 

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

 

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

 

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

 

10

 

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

 

(e)                                  Group acknowledges that Blue Shield retains
full authority to develop and periodically modify its procedures for Member PCP
selection and the assignment of the Member to a Medical Group when the selected
PCP is in multiple medical groups. 
Group and its Group Providers shall cooperate with Blue Shield’s Member
PCP selection process and shall assist Members in selecting a PCP when
requested to do so by the Member or Blue Shield.

 

(f)                                    In providing Capitated Professional Services
hereunder, Group shall comply with all obligations of state and federal law
relating to continuity of care and continued access to terminated providers.

 

(g)                                 Group shall, at all times during the term of
this Agreement, maintain an adequate network of Group Providers in number and
type to comply with the requirements of state and federal law and to ensure
that Members have timely and reasonable access to primary, specialty and
ancillary care, as set forth in the Provider Manual.  All providers who are designated as Group Providers by Group and
are communicated to be such by Group to Blue Shield shall at all times be
reasonably available to Members as is appropriate.

 

2.4                                 Standards
For Provision of Care.

 

(a)                                  Group and Group Providers shall maintain
facilities and equipment which meet all applicable legal requirements,
including accessibility, and which otherwise comply with the provider
credentialing requirements developed by Blue Shield for such providers, as more
fully described in the Provider Manual. 
Accessibility shall include compliance with the requirements of the
Americans With Disabilities Act.

 

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

 

11

 

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

 

(d)                                 Group represents and warrants that during the
term of this Agreement, each physician through whom it will provide Capitated
Professional Services hereunder shall: 
(i) maintain a current, unrestricted license to practice medicine in
California; and, (ii) maintain such staff privileges with at least one Blue
Shield Hospital as necessary for physician to provide services to Members
hereunder; and, (iii) be certified and eligible to participate in the Medicare
Program.  Group further represents and
warrants that: (iv) each non-physician Group Provider shall maintain a current
and unrestricted license to practice his/her profession or provide the contracted
service; and, (v) use of any physician extender shall be in strict compliance
with the rules of the California Medical Board.

 

(e)                                  Each Group Physician shall authorize each
hospital at which he/she maintains staff privileges to notify Blue Shield
should any disciplinary or other action of any kind be initiated against such
physician which could result in any suspension, reduction, or modification of
his/her hospital privileges.

 

2.5                                 Providers
Not Meeting Standards. Group shall promptly notify Blue Shield as
of the date Group knows that a Group Physician no longer meets any of Blue
Shield’s credentialing criteria as set forth in the Provider Manual.

 

2.6                                 Group
Service Contracts. 
Group shall provide to Blue Shield a written list of its Group
Providers, and each month notify Blue Shield of any additions or deletions to
such list (including any notices of termination of Group Providers), in
addition to which Group shall provide Blue Shield with immediate notice of
termination of Group Providers.  Further,
Group shall provide timely response to reasonable periodic requests from Blue
Shield for verification of the current list of Group Providers.  Group’s contracts with Group Providers shall
be in writing and shall ensure that such providers: (a) seek payment for the
provided services only from Group and under no circumstances seek payment from
the Member or from Blue Shield; (b) under no circumstances balance bill or
surcharge Members for Covered Services (including in the event of Group and/or
Blue Shield’s insolvency); (c) maintain and disclose such records to Blue
Shield and to Governmental Officials as set forth in Article IX hereof;
(d) permit Government Officials and Blue Shield to inspect its offices,
records, and facilities as set forth in Article X; (e) cooperate with and
participate in Blue Shield’s and Group’s quality improvement and utilization
management programs and Member grievance and appeal procedures; and, (f)
maintain such professional and general business liability insurance as set
forth in Article VIII hereof.  Upon
Blue Shield’s request, Group’s form of provider contract(s), along with the
executed signature pages to such contracts, shall be provided to Blue
Shield.  Group may maintain the
confidentiality of its payment rates (other than

 

12

 

bonus/withhold/shared risk or savings arrangements), provided that such
does not result in concealment or misunderstanding of other terms and
provisions of the contract.  Upon Blue
Shield’s request, such contracts shall be promptly amended to contain any
provisions required to be contained in provider contracts by either the
Department of Managed Health Care (“DMHC”), CMS, or any other governmental
agency.

 

2.7                                 Quality Improvement/ Case Management/ Utilization Management Programs. 
Group and Group Providers shall fully cooperate with and participate in
Blue Shield’s quality improvement and utilization management programs,
including its peer review functions, authorization procedures, and quality
improvement committees, as described in the Provider Manual.  Group shall immediately notify Blue Shield
of those Members and cases which Group has identified as requiring additional
resources and case management (see Provider Manual for commonly referred
diagnoses and conditions) and shall cooperate in the management of these
cases.  Group and Group Providers shall
fully cooperate with Blue Shield with regard to the Health Employer Data
Information Sets (HEDIS) measurements and HEDIS audits, guideline development, preventive
services utilization, disease/risk management, clinical service monitoring and
quality improvement studies and initiatives. 
Group and Group Providers shall comply with Blue Shield’s Medical
Policy.  The quality improvement and
quality management obligations of Blue Shield are not delegated to Group;
however, Group shall have its own fully functional Quality Management Program,
as described in Attachment 1 to Exhibit F hereto, that is cooperative with and
integrated into the Blue Shield Quality Management Program.  Group shall comply with and accept as final,
the decisions of the Blue Shield quality improvement and utilization management
program, and pending resolution of any dispute through the dispute resolution
process, comply with the decisions of the Blue Shield quality improvement and
utilization management program.

 

2.8                                 Right to
Re-Assign Members. 
Blue Shield reserves the right to re-assign Members from Group to
another medical group contracting with Blue Shield, or from a Group Physician
to another Group Physician, or to limit or deny the assignment or selection of
new Members to Group or a Group Physician Provider: (i) during any termination
notice period; or (ii) if Blue Shield determines that Capitated Professional
Services are not being properly provided to, or arranged for, such Members as
required by this Agreement and that such failure poses an immediate threat to
the Members health and safety.  In the
event that Blue Shield takes any action permitted by this Paragraph 2.8, this
Agreement shall continue in effect unless terminated by either party as set
forth in Article XII of the Agreement.

 

2.9                                 Outpatient Drug Formulary and Pharmacy Information.

 

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

 

(b)                                 In the event that Blue Shield provides to
Group computerized or electronic data regarding prescriptions obtained by
Members and drugs supplied, Group agrees that such information is provided for
the limited and restricted purpose of utilization management.  Under no circumstances may Group copy or
share such data with

 

13

 

others, or utilize such data, in whole or in part, directly or
indirectly, to negotiate rebates, discounts, or contracts with pharmaceutical
manufacturers or other suppliers of pharmaceuticals.

 

(c)                                  Group acknowledges that Blue Shield and its
designees retain sole authority to perform, in relationship to outpatient
pharmacy, claims processing, formulary development, a prior authorization
program, selection and contracting of a pharmacy network, and determination of
pharmacy benefit design.

 

2.10                           Reciprocity.

 

(a)                                  Group shall participate in the statewide Blue
Shield health services delivery network and shall accept referrals of Blue
Shield members (members of Blue Shield who are not Members hereunder) and/or
provide Emergency Services to such members, when such members are the financial
responsibility of other Blue Shield medical groups.  Except as Group and the other medical group to which such Blue
Shield member is assigned agree, Group shall accept as compensation for such
services, the rates set forth in Exhibit E, (the “Blue Shield Allowable Rates”)
minus the Blue Shield member’s applicable Copayment.

 

(b)                                 In the event that a Member receives Emergency
Services or Urgent Care Services from or Group refers a Member for Capitated
Professional Services to a healthcare provider who is neither a Group Provider
nor a provider who is obligated to accept the compensation described in subpart
(a) above, but with whom Blue Shield has negotiated compensation rates, then
Blue Shield, at Group’s request, may compensate such provider for the Capitated
Professional Services provided to the Member and deduct the amount of such
payment from any amount then or thereafter owed by Blue Shield to Group.  This provision is intended for specific
occasional services only and Blue Shield shall have no obligation hereunder to
compensate providers contracted to Group in the event of Group’s default in
compensating such providers.

 

(c)                                  Affiliates.  In the event that Group or a
Group Provider provides services to an individual who is not a member of Blue
Shield, but who is entitled to coverage for or payment of the services so
provided by virtue of enrollment in a health plan of an Affiliate of Blue
Shield, then Group and Group Providers agree to render services and to accept
payment of the Blue Shield Allowable Rates (Exhibit E.) from the Affiliate as
full and complete payment for such services less any co-payment, coinsurance or
deductible owed by the individual under the Affiliate health plan.  Group agrees to look solely to the Affiliate
and not to Blue Shield for payment for such services.  For purposes of this Paragraph, “Affiliate” means an organization
that is: (i) wholly owned by Blue Shield, or, (ii) under common ownership or
control with Blue Shield (a sister corporation), or, (iii) a joint venturer
with Blue Shield in an enterprise under which the Affiliate is obligated to
provide coverage for/pay for the services in question.

 

14

 

2.11                           Termination of Physician/Patient Relationship.

 

(a)                                  Group or a Group Provider may terminate the
professional relationship with a Member only with Blue Shield’s consent and in
accordance with the procedures set forth in the Provider Manual.  In the event a Group Provider terminates
his/her relationship with a Member, Group shall assist the Member in selecting
another Group Provider for the provision of Capitated Professional Services.

 

(b)                                 In no event may either Group or a Group
Provider terminate the professional relationship with a Member because of such
Member’s medical condition, or the amount, variety, or cost of Covered Services
that are required by the Member.

 

(c)                                  Group acknowledges that a Member may request
transfer between PCPs, and between Blue Shield medical groups, in accordance
with the Member’s applicable Health Services Contract and Evidence of
Coverage.  As appropriate, Group agrees
to accept the transfer of a Blue Shield member to Group at the request of Blue
Shield.

 

(d)                                 Notwithstanding the foregoing, when the
consent of CMS or any other governmental agency to the termination of a
physician-patient relationship is required pursuant to the rules and
regulations governing the Medicare Program or any other governmental program, neither
Group nor a Group Provider may terminate the physician-patient relationship
with a Blue Shield 65 Plus Member or such other Member without first obtaining
the consent of Blue Shield, CMS, or as applicable, the other governmental
agency.

 

2.12                           Encounter
Data and Other Reporting. 
Group shall submit to Blue Shield such encounter/claims data (“Encounter
Data”) as set forth in and in accordance with the requirements set forth in the
Provider Manual.  Group also shall
provide to Blue Shield such data regarding Group turn-around time for
authorizations and other administrative services as set forth in the Provider
Manual.

 

2.13                           Disclosures.

 

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

 

15

 

obligations under this Agreement. 
Group shall also provide Plan with thirty (30) days’ advance notice of
any proposed material change in the ownership of Group, a change in its
management services organization (if any), or the sale of all or substantially
all of the assets of the Group and obtain Plan’s prior approval of same, which
approval shall not be unreasonably withheld.

 

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

 

(c)                                  Group shall provide Blue Shield with monthly
claims reports required by Blue Shield in order to comply with state and federal
law and to ensure compliance by Group with the requirements of
Article III, hereof.

 

(d)                                 Blue Shield agrees that it shall treat as
confidential all financial information provided by Group in accordance with
subparts (b) and (c) of this section unless such information is publicly
available, and shall not disclose such information to others except as required
by law or as requested by Blue Shield’s regulators.

 

2.14                           Direct
Access Programs. 
Group shall participate in and comply with the Access+ and CareDirect
program requirements as set forth in the Provider Manual.

 

2.15                           Addition
of New Plan Benefit Programs.  In
the event that Blue Shield develops one or more new Benefit Programs and
requests that Group agree to amend this Agreement to add such new Benefit
Program(s) to this Agreement, Group shall in good faith consider such request
and make best efforts to resolve all matters (including the new Benefit Program
compensation) so that a finalized amendment to this Agreement may be executed
within thirty (30) days of Blue Shield’s request.

 

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

 

16

 

III.  PAYMENT
OF PROVIDERS BY GROUP

 

3.1                                 Timely Group
Payment. 
Group shall process claims from and pay its Group Providers and other
healthcare providers for Capitated Professional Services (including without
limitation the Emergency Services or Urgent Care Services which are Group’s
responsibility hereunder) in a timely fashion as set forth in Paragraph 13.4
hereof.  If Group delegates to a
subcontractor (either a management company, claims administrator, subcontracted
capitated provider, etc.) the obligation to process claims on Group’s behalf,
then Group shall: (i) immediately notify Blue Shield of such delegation,
including any change in the delegated entity, and, (ii) require that the
subcontractor comply with the claims payment procedure requirements set forth
in this Agreement.

 

3.2                                 Failure To
Make Payment.

 

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

 

(b)                                 In the event of Group’s continued or repeated
failure to compensate Group Providers or other healthcare providers within the
time limits required by this Agreement as set forth in Section 13.4, Blue
Shield may elect to pay claims on behalf of Group and offset the amount of such
payments, along with a monthly administrative fee (not to exceed 10% of monthly
Capitation) from any amounts then or thereafter owed by Blue Shield to Group,
including capitation.  Prior to any such
action, Blue Shield shall have provided Group with written notice of the
repeated failures and an opportunity to cure the noncompliance.

 

(c)                                  Group acknowledges that any such direct
payments to Group Providers by Blue Shield constitute partial mitigation of
damages incurred by Blue Shield for Group’s failure to perform its obligations
under this Agreement.

 

IV.  PERFORMANCE
OF DELEGATED FUNCTIONS

 

4.1                                 Delegation.  Blue Shield delegates to Group the
responsibilities set forth in Exhibit F, attached hereto, and Group agrees to
accept and perform such delegated responsibilities in full compliance with the
delegation criteria and standards for performance of delegated activities set
forth in Exhibit F, and the Provider Manual. 
Responsibility for all functions not so delegated is retained by Blue
Shield.  With respect to matters
delegated, Blue Shield retains final authority and responsibility, including
without limitation, the determination of the Medical Necessity of Covered
Services, the determination as to which services are Covered Services, and the
determination as to who is or is not a Member.

 

17

 

4.2                                 Blue
Shield Monitoring and Oversight. 
Group acknowledges Blue Shield’s responsibility to monitor Group’s
compliance with the delegation criteria and standards and agrees to cooperate
with Blue Shield’s monitoring of such compliance, as set forth in Exhibit F,
and the Provider Manual.

 

4.3                                 Termination
of Delegation.

 

(a)                                  In the event that Blue Shield is dissatisfied
for any reason with Group’s performance of delegated activities, Blue Shield
may, in its sole discretion, modify Group’s status (with respect to all or a
particular delegated activity) from fully delegated to delegated with
corrective action.  Such notice of
delegation with corrective action shall set forth the deficiencies perceived by
Blue Shield in Group’s performance of delegated activities, and Group shall
have ninety (90) days to correct such deficiencies to the reasonable
satisfaction of Blue Shield.  In the
event such deficiencies are not corrected to the reasonable satisfaction of
Blue Shield, Blue Shield may, in its sole discretion, terminate the delegation
or extend the period given Group to correct such deficiencies.

 

(b)                                 In lieu of the notice of delegation with
corrective action and opportunity to correct deficiencies, as set forth in
Paragraph 4.3(a) above, Blue Shield may at anytime within its sole discretion,
terminate all or portions of the delegation granted to Group hereunder by
providing no less than sixty (60) days prior written notice.  Blue Shield may also terminate all or
portions of the delegation granted to Group hereunder if Blue Shield
determines, after consultation with Group, that Group either no longer meets
all criteria or is not performing (or is reasonably not likely to perform) the
delegated activities in full compliance with the standards.  In such event, Blue Shield shall give to
Group no less than thirty (30) days prior notice of such termination of
delegation, and if Group, during such notice period, cures such deficiencies to
Blue Shield’s reasonable satisfaction, Blue Shield may, in its sole discretion,
withdraw such termination.  The reduction
amount set forth in Exhibit F, is intended solely as a penalty and will cease
when Group has demonstrated successful implementation of the corrective action
plan.

 

(c)                                  Upon termination of all or part of the
delegation pursuant to this Article IV, Blue Shield may, in its sole
discretion, reduce the Capitation amount otherwise payable to Group hereunder
by a per member amount as set forth in Exhibit F, for each delegated service,
which amount is not intended to represent the portion of the capitation amounts
that are allocated to cover the cost of performance of the delegate service by
Group nor an estimate of the costs incurred by Blue Shield as a result of the
termination of such delegation; rather, the amounts set forth in Exhibit F, are
intended as a penalty for Group’s failure to meet the standards established for
performance of the delegated service.

 

18

 

V.  OBLIGATIONS
OF BLUE SHIELD

 

5.1                                 Directory
and Use of Names.

 

(a)                                  Blue Shield shall develop a directory of
Primary Care Physicians and certain specialists and other healthcare providers
participating in Blue Shield which shall be distributed to Members.  Blue Shield may provide a draft of such
directory to Group and Group may, within five (5) working days thereafter,
submit to Blue Shield, any additions, deletions, or modifications to be
included in the directory.  Group, on
behalf of itself and each of its Group Providers, agrees that the following
information may be included in Blue Shield’s marketing materials, Blue Shield
publications provided to present or potential Members and subscriber groups,
and in other written or electronic information sources provided to present or
potential Members and subscriber groups: (i) Group’s name, address, phone
number; (ii) the names, addresses, phone numbers, areas of practice of its
Group Providers (and other provider specific information); and, (iii) such
other types of information regarding Group and Group Providers which are
reasonable to include in directories, marketing materials, or publications.  Group and Group Providers agree that in the
event this Agreement is terminated, or the listing information is or becomes
incorrect or incomplete, Blue Shield will have no obligation to correct,
delete, or update such listing information until such time as Blue Shield, in
its sole discretion, issues a new directory, marketing material, or Blue Shield
publication.

 

(b)                                 Except as provided in subpart (a) above,
neither Blue Shield nor Group shall use the other’s name, trademark(s), or
service mark(s), without the other’s prior written consent, which consent shall
not be unreasonably withheld.

 

5.2                                 Provider Manual.  Blue Shield shall develop a Provider Manual,
and Group and Group Providers shall comply with its provisions.  Blue Shield may, in its discretion,
periodically modify the Provider Manual by written notice to Group.  The Provider Manual, as so amended, is
incorporated herein by reference.  To
the extent of any conflict between this Agreement and the Provider Manual, the
terms of this Agreement shall govern. 
Blue Shield will provide Group with 60 days’ advance notice of any
proposed changes in the Provider Manual. 
In the event Group reasonably concludes that a change in the Provider
Manual is material and would have an adverse financial impact on the Group,
then Group and Blue Shield shall confer in good faith regarding the
change.  If Group and Blue Shield are
unable to reach agreement regarding the change, then Group may elect to
terminate this Agreement pursuant to Section 12.2 hereof, and the Provider
Manual change to which Group objected shall not be effective as to Group during
the termination notice period.

 

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

 

5.4                                 Administrative
Services. 
Blue Shield shall perform those services incident to the administration
of a health care service plan including, but not limited to, the processing of

 

19

 

enrollment applications, assignment of Members to PCPs, and the
administration of claims for Covered Services which are not Capitated
Professional Services or Capitated Hospital Services.

 

VI.  ELIGIBILITY
OF BLUE SHIELD MEMBERS

 

6.1                                 Identification Cards and Verification. 
Blue Shield shall issue identification cards to Members as set forth in
the Provider Manual.  Production of such
identification cards shall be indicative of a person’s status as a Member, but
shall not be conclusive of such status. 
Blue Shield shall provide or shall make available to Group in formats
that may be accessed by Group electronically or telephonically, information
regarding Member status and Group/Primary Care Physician selection.

 

6.2                                 Verification
of Eligibility.  As
set forth in the Provider Manual, Group and Group Providers shall verity the
eligibility of Members and provide services to individuals claiming eligibility
but whose name does not appear on Blue Shield’s Eligibility List.  Verification of eligibility shall not limit
the rights of Blue Shield to retroactively adjust eligibility, as set forth in
Paragraph 6.3 of this Agreement.

 

6.3                                 Eligibility
List and Modifications.

 

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

 

(b)                                 In the event Blue Shield retroactively
deletes a Member and Group has provided Capitated Services to such deleted
Member during the period of retroactive deletion, Blue Shield shall compensate
Group for such services only if Group has unsuccessfully billed the Member
through two (2) billing cycles.  The
amount owed by Blue Shield for such Covered Services provided during the period
of retroactive deletion shall be the Blue Shield Allowable Rates set forth in
Exhibit E., net of any Co-payments. 
Notwithstanding the foregoing, Blue Shield shall have no obligation to
compensate Group for such services in the event that such Member is covered
during the period of retroactive deletion by another health care service plan,
insurer, or third party payor (including Medicare).

 

20

 

(c)                                  In the event a person is retroactively added
as a Member, Blue Shield’s financial responsibility shall be the payment of
Capitation for the period of retroactive addition.  Any payments collected from such Member by Group or Group
Providers for Covered Services hereunder, other than applicable Co-payments,
shall be refunded to the Member.

 

VII.  COMPENSATION
&  FINANCIAL TERMS

 

7.1                                 Capitation
Payments.

 

(a)                                  Blue Shield shall pay Group, on a monthly
basis, the applicable Capitation set forth in Exhibit C.  Such Capitation shall be paid for Members
not enrolled in the Blue Shield 65 Plus Benefit Program no later than the twentieth
(20th) day of the month.  Capitation
shall be paid for Members who are enrolled in Blue Shield’s Blue Shield 65 Plus
Benefit Program no later than the later occurring of the twentieth (20th) day
of the month or five (5) business days following the date Blue Shield receives
the CMS capitation payment for such Members.

 

(b)                                 Medicare Primary.  For
those Members for whom Medicare is primary, Group or Group Providers shall bill
Medicare as the primary payer for Medicare covered benefits.  For such Members, Blue Shield shall pay a
reduced Capitation as set forth in Exhibit C., and Group shall be financially
responsible for all Capitated Professional Services (including those which are
not Medicare benefits) which are Covered Services for said Members.  In addition, neither Group nor Group
Providers may charge or collect from such Members the Member’s Medicare
coinsurance and deductible.  The
Medicare Primary Member, however, shall be responsible for his/her applicable
Co-payment set forth in the applicable Health Services Contract and Evidence of
Coverage.

 

(c)                                  The Capitation paid shall be for all Members
eligible on the first (1st) day of the month for which the Capitation is to be
paid, who have chosen a Group physician as their PCP.  Group shall accept payment of Capitation in accordance with this
Agreement, and applicable Co-payments and coordination of benefits collections,
as payment in full for all Capitated Professional Services, administrative
services, and other services rendered by Group pursuant to this Agreement.

 

(d)                                 In the event this Agreement terminates on a
day other than the last day of a month, Blue Shield may pro-rate the Capitation
due for said month based on the number of days in said month covered by the
Agreement to the total number of calendar days in said month.

 

21

 

7.2                                 Services Other Than Capitated Professional Services.

 

(a)                                  In the event that Group provides Emergency
Services, Urgent Care Services, or authorized Covered Services to Blue Shield’s
HMO members who are not Members hereunder (and for whom such services are not
the financial responsibility of another capitated Blue Shield medical group),
Group shall bill Blue Shield for the provision of such services as set forth in
the Provider Manual.  Blue Shield shall
pay Group for the services described in this Paragraph 7.2 at the rates set
forth in Exhibit E., minus any applicable Co-payment.  All such billings shall be delivered to Blue Shield within sixty
(60) days of the date of service.  Blue
Shield may deny payment for any bills not received by Blue Shield within one
hundred eighty (180) days of the date of service and in such event, neither
Group nor Group Providers may bill the Member for such services.

 

(b)                                 Notwithstanding the foregoing subpart (a), in
the event that Blue Shield is not the primary payor, Group shall not make any
demand for payment from Blue Shield until all primary sources of payment have
been pursued.  Blue Shield’s obligation
hereunder with respect to such Covered Services provided to members who are not
Members hereunder, shall be limited to the amount, if any, which when added to
the amount obtained by Group from such primary payors, equals the amount of
compensation to which Group is entitled under this Agreement for such services.

 

7.3                                 Co-payments.  Group shall collect and retain, as additional
compensation, the Member’s applicable Co-payment for Covered Services
provided.  Such Co-payment obligation
shall not be waived by Group or Group Providers.

 

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

 

7.5                                 Shared
Savings Programs.

 

(a)                                  Blue Shield shall establish a Shared Savings
Program pursuant to which Blue Shield and Group share savings for the cost of
Covered Shared Savings Services provided to Members during the Agreement
Year.  The provisions of the Shared
Savings Program for Members who are enrolled in Benefit Programs other than
Blue Shield 65 Plus are set forth in Part A of Exhibit D.  The provisions of the Shared Savings Program
for Blue Shield 65 Plus Members are set forth in Part B of Exhibit D.

 

22

 

(b)                                 Blue Shield shall establish a Pharmacy Shared
Savings Fund Program pursuant to which Blue Shield and Group share savings for
the cost of Covered Outpatient Prescription Drug services provided to Blue
Shield 65 Plus Members during the Agreement Year.  The provisions of the Pharmacy Shared Savings Fund Program are
set forth in Part C, of Exhibit D.

 

(c)                                  Blue Shield may offset any amount owed to
Blue Shield by Group under a Shared Savings Program, Pharmacy Shared Savings
Fund, or other risk sharing or incentive agreement (regardless of year owed or
under which agreement owed) from any amount, other than Capitation and
Professional Stop Loss Program payments made pursuant to Exhibit H, owed by
Blue Shield to Group under this or any other agreement between Blue Shield and
Group.

 

(d)                                 In the event that Group has contracted with a
provider for services at rates which are more favorable than the rates obtained
by Blue Shield and a Shared Savings Service is provided by such provider to a
Member hereunder, Group shall make best efforts to cooperate with Blue Shield
to obtain such more favorable rate for the provision of Shared Savings Service
to such Member.

 

(e)                                  In the event Group wishes to dispute Blue
Shield determinations regarding the Shared Savings Program settlements, it
shall notify Blue Shield in writing within sixty (60) days following such
settlement determination, and if such dispute is not resolved by the parties,
Group may request arbitration as set forth in Article XI.

 

7.6                                 Blue
Shield POS Benefit Program. 
This Agreement shall apply to Blue Shield POS Benefit Programs only if
so indicated on Exhibit A, attached hereto. 
Compensation to Group for Members enrolled in a Blue Shield POS Benefit
Program shall be as described in Exhibit G-2 attached hereto.  Blue Shield may offset surpluses in the POS
Out-of-Network Funds settlements against any deficits in any other risk or
incentive agreement.  Blue Shield shall
not offset any deficits in the POS Out-of-Network Funds settlements against any
other amounts owed to Group by Blue Shield.

 

7.7                                 Third Party
Liens.  In  the event a Member seeks and obtains a
recovery from a third party or a third party’s insurer for injuries caused to
that Member, and only to the extent permitted by the Member’s Evidence of
Coverage and by California law, Group shall have the right to assert a third
party lien for and to recover from the Member the reasonable value of Capitated
Professional Services provided to the Member by Group for the injuries caused
by the third party.  Group’s pursuit and
recovery under third party liens shall be conducted in strict accordance with
the procedures set forth in the Provider Manual.  Blue Shield shall similarly have the right to assert a lien for
and recover for payments made by Blue Shield for such injuries.  Group shall cooperate with Blue Shield in
identifying such third party liability claims and in providing such
information, within such time frames, as set forth in the Provider Manual.

 

23

 

7.8                                 Groups Organized By Geographic Regions.  In the
event that Blue Shield and Group have agreed that Group will provide services
to Members in specified multiple geographic regions, such regions shall be
described in Exhibit A., and Blue Shield shall pay Group Capitation based upon
the region in which the Member selects a Group PCP.  Shared Savings settlements shall be determined on a region by
region basis, with any amounts owed by Blue Shield to Group for one region(s)
offset by any amounts owed by Group to Blue Shield for any other region(s).

 

7.9                                 Purpose
of Incentive Programs.  The
parties understand that any payments made directly or indirectly to the Group
under the incentive provisions set forth in this Agreement, including the
Shared Savings Program (Paragraph 7.5), are not made as an inducement to reduce
or limit Medically Necessary Covered Services to any specific Member.

 

7.10                           Blue
Shield Timeliness Guarantee. 
Except for reasons not attributable to Blue Shield (e.g., natural
disaster), in the event that Blue Shield fails to:

 

(i)                                     Provide to Group a Member eligibility list on
or before the 10th day of each month, Blue Shield shall, as a penalty, pay to
Group ten cents ($0.10) for each Member, as the number of Members are
determined by the list once provided. 
If the list is provided by the 10th day of the month, no penalty is
payable even if the list is incomplete or is subsequently corrected; and,

 

(ii)                                  Pay monthly Capitation to Group within the
time limits required by this Agreement, Blue Shield shall pay interest on the
unpaid Capitation until paid, at the Bank of America prime rate plus two
percent (2%) per annum.  Such interest
is not payable if Capitation is paid within such time limits, regardless of
whether such Capitation is incomplete or subsequently corrected.

 

7.11                           Encounter
Data Submission Penalties. 
Based on Blue Shield’s quarterly determinations and following no less
than thirty (30) days prior notice to Group, Blue Shield may withhold a portion
of Group’s Capitation, as set forth in Exhibit C., in the event that Blue
Shield determines that a significant portion (as described in the Provider
Manual) of the monthly Encounter Data which Group is obligated to provide
(Paragraph 2.12) has not been delivered to Blue Shield within the prior
quarter.  If at the quarterly
determination next following such withhold, Blue Shield determines that Group
has satisfactorily delivered to Blue Shield the previously non-delivered
Encounter Data, such withheld Capitation shall be paid to Group, without
interest.  In the event that Group does
not deliver such Encounter Data to Blue Shield prior to such quarterly
determination, Blue Shield shall be entitled to retain such withheld Capitation
and will continue to deduct from the Group’s Capitation and retain such
deductions as described in Exhibit C, from each quarter’s Capitation.  If at a later date Group resumes the timely
and complete submission of encounter data as required by this Agreement, then
Blue

 

24

 

Shield will cease deducting these penalties from Group’s Capitation
beginning as of the month in which compliance is demonstrated by Group.

 

VIII.  PROTECTION OF
MEMBERS

 

8.1                                 Non-discrimination.  Except as otherwise provided
in this Agreement, Group and Group Providers shall make Capitated Services available
to Members in the same manner, in accordance with the same standards, and with
no less availability as Group and Group Providers provide services to their
other patients.  Group and Group
Providers shall not discriminate against any Member in its provision of Covered
Services on account of race, sex, color, religion, national origin, ancestry,
age, physical or mental handicap, health status, disability, need for medical
care, sexual preference, or veteran’s status, or status as a Member of Blue
Shield.

 

8.2                                 Credentialed
Providers.  In
providing Capitated Services hereunder, and except as otherwise provided in
Paragraph 2.4, Group shall utilize only Group Providers who are credentialed
and re-credentialed in accordance with Blue Shield’s standards as set forth in
the Provider Manual.  Group and/or each
Group Provider shall provide to Blue Shield, on request, credentialing
information, in such form as reasonably required by Blue Shield.

 

8.3                                 Charges to
Members.

 

(a)                                  In no event, including but not limited to
nonpayment by Blue Shield or Group, or Blue Shield’s or Group’s insolvency or
breach of this Agreement (or breach by Group of its agreement with Group
Provider), shall Group and Group Providers bill, charge, collect a deposit
from, impose a surcharge on, seek compensation, remuneration or reimbursement
from or have any recourse against, Members or an individual responsible for
their care for Covered Services.  Nor
shall Group or a Group Provider seek payment from Members or individuals
responsible for their care, for payments for Covered Services denied by Blue
Shield or Group because such bill or claim was not timely or properly
submitted, or because the rendered services were not Medically Necessary or
Authorized.  Whenever Blue Shield
receives notice of a violation of this Paragraph 8.3, it shall take appropriate
action (including without limitation the right to reimburse the Member the
amount of any payment and offset the amount of such payment from any amounts
then or thereafter owed by Blue Shield to Group).

 

(b)                                 Group and Group Providers shall not bill or
collect from a Member any charges in connection with Non-Covered Services,
non-Authorized services, or services determined not to be Medically Necessary
unless Group, or as applicable, the Group Provider, has first obtained a
written acknowledgment from the Member that such services are either not
Covered Services, not Authorized, or not Medically Necessary, and that the
Member, or the Member’s legal representative, is financially responsible

 

25

 

for the cost of such services. 
Such acknowledgment shall be obtained prior to the time that such
services are provided to the Member and shall be in such form as meets the
applicable requirements set forth in the Provider Manual.

 

(c)                                  Group agrees that, in the event of Blue
Shield’s insolvency or other cessation of operations, Covered Services to
Members will continue through the period for which their premiums have been
paid, and Covered Services to Members confined in an inpatient facility on the
date of insolvency or other cessation of operations will continue until the
Member’s discharge.

 

(d)                                 The provisions of this Paragraph 8.3
shall:  (i) survive the termination of
this Agreement (and any agreement between Group and Group Provider) regardless
of the cause giving rise to termination and shall be construed to be for the
benefit of Members; and, (ii) supersede any oral or written contrary agreement
(now existing or hereafter entered into) between the Group or Group Provider
and the Member.

 

(e)                                  The provisions of this Paragraph 8.3 shall be
incorporated into any agreement between the Group and its contracted healthcare
providers.  This Paragraph 8.3 shall not
be changed without the prior approval of the appropriate government regulatory
agency.

 

8.4                                 Protection of Members.  In the event that Blue Shield
or a Member notifies Group that a Group Provider (or physician providing
coverage for such Group Provider), or another provider who provided Capitated
Professional Services to the Member is billing, suing, or otherwise attempting
to collect (“Collection”) payment from the Member or person responsible for the
Member’s care, other than Co-payments, Group shall immediately take all
reasonable and appropriate actions to stop such Collection.  In the event that Group is unable to timely
stop such Collection, as determined by Blue Shield, Blue Shield may take any
steps it deems appropriate, including payment of the claim, to stop such
Collection.  In such event, Blue Shield
may deduct and offset such payment from any amount then or thereafter payable
by Blue Shield to Group.

 

8.5                                 Benefits
Determination.  All
final decisions regarding coverage are reserved to Blue Shield, and Group shall
refer Members who have inquiries or disputes regarding such coverage to Blue
Shield for response and resolution. 
This provision, however, does not and shall not be construed to prohibit
any physician from providing any medical treatment, or other advice which such
physician believes to be in the best interest of the patient.

 

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

 

26

 

8.7                                 Medical Necessity Assistance.  In all cases where the Group and/or a Group
Provider has made a determination regarding the Medical Necessity of a medical
service requested or provided to a Member, Group shall, upon the request of
Blue Shield, assist Blue Shield in determining
the Medical Necessity of such service and provide relevant medical records to
Blue Shield and participate in any grievance, arbitration, and/or other
proceedings in which such Medical Necessity determination is an issue.  Moreover, Group agrees to cooperate with and
abide by the Medical Necessity determination of any external review entity to
which Blue Shield is either obligated by law to submit such disputes or for
which Blue Shield has implemented a program to submit such disputes to external
review.

 

8.8                                 Free
Exchange of Information.  No
provision of this Agreement shall be construed to prohibit, nor shall any
provision in any contract between Group and its employees or subcontractors
prohibit, the free, open and unrestricted exchange of any and all information
of any kind between health care providers and Members regarding the nature of
the Member’s medical condition, the health care treatment options and
alternatives available and their relative risks and benefits, whether or not
covered or excluded under the Member’s health plan, and the Member’s right to
appeal any adverse decision made by Group or Blue Shield regarding coverage of
treatment which has been recommended or rendered.  Moreover, Group shall not penalize nor sanction any health care
provider in any way for engaging in such free, open and unrestricted
communication with a Member nor for advocating for a particular service on a
Member’s behalf.

 

8.9                                 Insurance.

 

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

 

(b)                                 Each Group Provider who is not a physician
shall maintain insurance as set forth above, but with commercially reasonable
policy limits appropriate to the risk being insured.

 

(c)                                  Group and Group Providers shall maintain
Workers’ Compensation insurance covering all employees of Group or, as applicable,
of Group Provider.

 

(d)                                 Group shall notify Blue Shield and provide
evidence to Blue Shield at the time of any amendment, change or modification to
such insurance coverage and at any time on reasonable request by Blue Shield
during the term of this Agreement.

 

27

 

IX.  MEDICAL
RECORDS &  CONFIDENTIALITY

 

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

 

9.2                                 Confidentiality.  Group and Group Providers
shall comply with all applicable state and federal laws regarding privacy and
confidentiality of medical information and records, including mental health
records.  Group and Group Providers
shall develop policies and procedures to ensure that Member medical records are
not disclosed in violation of Cal. Civ. Code §§ 56, et seq.  To the extent Group receives, maintains or
transmits medical or personal information of Members electronically, Group
shall comply with all state and federal laws relating to the protection of such
information including, but not limited to, the Health Insurance Portability and
Accountability Act (HIPAA) provisions on security and confidentiality and any
CMS regulations or directives relating to Medicare beneficiaries.

 

9.3                                 Member
Access to Records. 
Group and Group Providers shall ensure that Members have access to their
medical records in accordance with the requirements of state and federal law.

 

28

 

X.  COOPERATION
WITH AUDITS & CERTIFICATIONS

 

10.1                           Disclosure
of Records.

 

(a)                                  Group and each Group Provider shall comply
with all provisions of the Omnibus Reconciliation Act of 1980 regarding access
to books, documents, and records. 
Without limiting the foregoing, Group shall maintain such records and
provide such information to Blue Shield as well as to DMHC, CMS, any Peer
Review Organization (“PRO”) with which Blue Shield contracts as required by
CMS, the U.S. Comptroller General, their designees and any other governmental
officials entitled to such access by law (collectively, “Governmental
Officials”) as required by law and as may be necessary for compliance by Blue
Shield with the provisions of all state and federal laws governing Blue Shield.  Blue Shield and Government Officials shall
have access to, and copies of, at reasonable time upon request, the medical
records, books, charts, and papers relating to the Provider’s provision of
health care services to Members, the cost of such services, and payment
received by the Provider from the Member (or from others on their behalf), and
to the financial condition of the provider. 
Such records described herein shall be maintained at least six (6) years
from the end of each Agreement Year, and, if this Agreement is applicable to
Blue Shield 65 Plus, six (6) years from the close of CMS’ fiscal year in which
the contract was in effect (or for a particular record or group of records, a
longer time period when or DMHC requests such longer record retention and Group
is notified of such request by Blue Shield), and in no event for a shorter
period than as may be required by the Knox-Keene Act and the regulations
promulgated thereunder.  All records of
Group/Providers shall be maintained in accordance with the general standards
applicable to such book or record keeping and shall be maintained during any
governmental audit or investigation.

 

(b)                                 Group shall, on request, disclose to
Government Officials the method and amount of compensation or other
consideration to be received by it from Blue Shield or payable by Group to its
subcontractors.  Group shall maintain
and make available to Government Officials: 
(i) its subcontracts, and (ii) compensation/financial records relating
to such subcontracts and compensation from Blue Shield.

 

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

 

29

 

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

 

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

 

10.3                           Accreditation
Surveys. 
Group and Group providers shall cooperate in the manner described in
Paragraphs 10.1 and 10.2 hereof with respect to surveys and site evaluations
relating to accreditation of Blue Shield by NCQA or any other accrediting
organization.  Further, Group agrees to
implement any changes reasonably required as a result of all such surveys.

 

10.4                           Compliance
Monitoring. 
Group shall cooperate with Blue Shield in the performance of any
monitoring, studies, evaluations analyses or surveys required by Government
Officials or accrediting organizations of Group’s performance of services
hereunder.

 

XI.  RESOLUTION
OF DISPUTES

 

11.1                           Provider Dispute Resolution Procedure. 
Blue Shield and Group agree to meet and confer in good faith to resolve
any disputes that arise under this Agreement, except for dispute relating to
the procedure whereby this Agreement may be terminated, which disputes shall be
governed exclusively by Paragraph 11.2 hereof. 
If such disputes remain unresolved, they may be referred to the Blue
Shield Provider Dispute Resolution Committee. 
Disputes may be submitted in writing addressed to Blue Shield Dispute
Resolution Committee, Attn: Network Manager, Provider Services, P. O. Box
629011, El Dorado Hills, CA 95762-9011. 
Disputes referred to the Blue Shield Provider Dispute Resolution
Committee shall be decided within thirty (30) days of referral.  If such disputes cannot be resolved by the
Blue Shield Provider Dispute Resolution Committee, Blue Shield and Group agree
to submit the dispute to binding arbitration pursuant to Section 11.2 of
this Agreement.  Group further agrees
that the procedures set forth in this Paragraph 11.1 may be used in the event
that a Group Provider has a dispute with Group.  Pursuit by Group of a dispute through the processes described in
this Article XI, shall not modify nor relieve Group of any obligations to
continue to provide services to Members in accordance with and to comply with
all terms of this Agreement.

 

30

 

11.2                           Arbitration
of Disputes.  If
any dispute, controversy, or misunderstanding (other than a claim of medical
malpractice) arises between the parties to this Agreement which exceeds the
jurisdiction of Small Claims Court, which was not resolved in the Provider
Dispute Resolution procedure set forth in Paragraph 11.1, and which may
directly or indirectly concern or involve any term, covenant, or condition
hereof, the parties shall settle the dispute by final and binding arbitration
in San Francisco, Los Angeles, San Diego or Sacramento, California, whichever
city is closest to the Group. 
Arbitration shall be conducted under the Commercial Rules of the
American Arbitration Association.  The
arbitration decision shall be binding on both parties.  It is agreed that the arbitrator shall be
bound by applicable state and federal law and that the arbitrator shall issue
written findings of fact and conclusions of law.  The arbitrator shall have no authority to award damages or
provide a remedy which would not be available to such prevailing party in a
court of law nor shall the arbitrator have the authority to award punitive
damages.  The cost of the arbitration
shall be shared equally by Group and Plan. 
Each party shall be responsible for its own attorneys’ fees.

 

11.3                           Cooperation
With Member Disputes. 
Group and Group Providers shall cooperate in the Member grievance and
appeals process as described in the Provider Manual.

 

XII.  TERM &
TERMINATION

 

12.1                           Term.  When executed by both parties, this
Agreement shall become effective as of the Effective Date, and shall continue
in effect for two (2) years thereafter, unless earlier terminated as set forth
below.  Unless either party notifies the
other party at least one hundred eighty (180) days prior to the expiration of
said initial two (2) year term, this Agreement shall, following expiration of
the initial term, continue in effect for additional one (1) year terms until
terminated as set forth below.

 

12.2                           Termination
Without Cause. 
Either party may terminate this Agreement at anytime without cause by
giving to the other party at least one hundred eighty (180) calendar days
written notice of termination.  The
termination shall become effective the first day of the month following the
expiration of the notice period.

 

12.3                           Termination
for Cause. 
Either party may, subject to the cure period set forth in Paragraph
12.4, terminate this Agreement for material cause after written notice as set
forth hereinafter.  The following shall
constitute a material cause for termination:

 

(a)                                  By Group if: (i) Blue Shield fails to pay Group the Capitation due to Group
hereunder within twenty (20) days of such payment’s due date; or, (ii)
revocation of Blue Shield’s license necessary for the performance of this
Agreement; or, (iii) Blue Shield breaches any material term, covenant, or
condition of this Agreement.

 

31

 

(b)                                 By Blue Shield if: (i) the filing of bankruptcy by a parent
or subsidiary or substantial deterioration in the financial condition of a
parent, affiliate or subsidiary, or, (ii) Group fails to provide quality
medical services consistent with the standards set forth in this Agreement and
in the Provider Manual; or, (iii) Group breaches any material term, covenant,
or condition of this Agreement.

 

Notwithstanding any provision of Paragraph 12.4 to the contrary, Blue
Shield may immediately terminate this Agreement in the event that Group is
excluded from participation in Medicare or Group fails to maintain all
insurance required herein, or if Blue Shield, after consultation with Group,
determines in good faith that continuation of this Agreement may reasonably be
expected to jeopardize the health, safety, or welfare of Members, or if Blue
Shield reasonably determines, after consulting with Group, that Group is likely
to be financially unable to provide and/or pay for, in a competent and timely
manner, Capitated Professional Services.

 

12.4                           Notice and
Cure Period.  A
party seeking to terminate this Agreement for material breach shall notify the
other party in writing of the nature of the breach and the other party shall
have thirty (30) days from the receipt of such notice to cure or otherwise
eliminate such cause.  If the other
party does not remedy the breach, to the reasonable satisfaction of the
non-breaching party, this Agreement shall terminate at the end of the thirty
(30) day period.

 

12.5                           Termination
Not an Exclusive Remedy.  The
termination of this Agreement by either party pursuant to this Article XII
is not an exclusive remedy and such terminating party retains whatever rights
in law or equity as may be necessary to enforce its rights under this
Agreement.

 

12.6                           Effect of
Termination.  As
of the date of termination, this Agreement shall be considered of no further
force or effect whatsoever, and each of the parties shall be relieved and
discharged herefrom, except that:

 

(a)                                  Termination shall not affect any rights or
obligations hereunder which have previously accrued, or shall hereafter arise
with respect to any occurrence prior to termination, and such rights and
obligations shall continue to be governed by the terms of this Agreement.

 

(b)                                 Group shall, at Blue Shield’s option,
continue rendering Capitated Professional Services after the termination of
this Agreement to Members assigned to Group at the capitation rates in effect
immediately prior to the date of termination, for the duration of the contracts
in effect with Blue Shield through which Members are enrolled with Blue Shield,
or until such time as Blue Shield has arranged for an alternative source of
services for each such Member from other contracting providers.

 

32

 

(c)                                  Group shall, in the event of Blue Shield’s
insolvency, continue rendering Capitated Professional Services to any Member
who is an inpatient of a hospital until such Member’s discharge or transfer to
another appropriate facility.

 

(d)                                 The following paragraphs of this Agreement
shall survive the termination of this Agreement, whether such termination is
the result of rescission or otherwise: Paragraphs 2.9(b), 3.1, 5.1, 8.3, 8.4,
8.6, 8.7, 8.8, 10.1, 11.1, 11.2, 14.9, and 14.10.

 

XIII.  COMPLIANCE
WITH LEGAL REQUIREMENTS

 

13.1                           Consistency with State Law.  This Agreement is subject to
the requirements of Chapter 2.2 of Division 2 of the California Health &
Safety Code (the Knox-Keene Act) and of Subchapter 5.5 of Chapter 3 of Title 10
of the California Administrative Code. 
Any provision required to be in this Agreement by either of the above
Codes shall bind Blue Shield and Group, whether or not provided in this
Agreement.  Group shall require that
Group Providers similarly comply with all applicable provisions of the Act and
Rules.

 

13.2                           Consistency
with Federal Law.  If
this Agreement applies to Blue Shield 65 Plus, Group shall comply and Group
shall require that its Group Providers comply with the statutes and regulations
and CMS instructions which govern Blue Shield’s Agreement with CMS.  Moreover, Group and Group Providers shall
comply with the additional obligations set forth in Exhibit G-l hereto.  Group also agrees that, to the extent ERISA
statutes and regulations apply to the claims payment and Member complaint
functions performed by Group, Group and Group Providers shall comply with all
such requirements.

 

13.3                           Coordination
of Benefits. 
Group agrees that coordination of benefits, benefit determinations under
the Medicare Secondary Payor rules, and Workers’ Compensation recoveries shall
be conducted by Group in accordance with the procedures set forth in the
Provider Manual.

 

13.4                           Timely Payment.  In making payments to Group Providers and
other providers for Capitated Professional Services as set forth in
Article III, hereof, Group shall comply and shall cause all subcontractors
to whom claims payment obligations are delegated to comply with the timeliness
requirements set forth in applicable state and federal law, including, but not limited
to, Section 1371 of the Knox-Keene Act and any applicable CMS rules and
regulations.

 

13.5                           Disclosure
of Provider Profiling. 
Group shall, upon request from Blue Shield and as further described in
the Provider Manual, provide Blue Shield with information regarding any
“economic profiling” of Group Providers by Group in order to permit Blue Shield
to comply with the provisions of Section 1367.02 of the Knox-Keene
Act.  Further, to the extent that group
utilizes “economic profiling” as defined in Section 1367.02, Group shall
provide copies of economic profiling information to Group Providers in
accordance with the requirements of Section 1367.02.

 

33

 

13.6                           Provider
Terminations.  In
the event that a subcontract with a Group Provider is denied, suspended or
terminated, Group shall provide the provider with written notice of the reason
for the action as required by state and federal law, including any standards
and profiling data Group used to evaluate the provider, the number and mix of
similar health care providers that Group needs (if applicable), and notice of
the provider’s right to appeal the action, including notice of the process and
timing to request a hearing.  In the
event Group terminates a contract with a Group Provider for deficiencies in the
quality of care provider, Group shall give notice of the action to the
appropriate licensing and disciplinary bodies.

 

13.7                           Financial Solvency Reporting  The Group shall, as further described in the
Provider Manual, submit Quarterly and Annual reports to the Department of
Managed Health Care in compliance with the legal requirements of Subchapter 5.5
of Chapter 3 of Title 28, California Code of Regulations §1300.75.4.2.

 

13.8                           Blue Shield Reporting Requirements  Blue Shield shall submit Quarterly and
Annual reports to the Department of Managed Health Care in compliance with the
legal requirements of Subchapter 5.5 of Chapter 3 of Title 28, California Code
of Regulations § 1300.75.4.3.

 

XIV.  GENERAL
PROVISIONS

 

14.1                           Waiver of Breach.  The waiver of any breach of
this Agreement by either party shall not constitute a continuing waiver of any
subsequent breach of either the same or any other provisions of this Agreement.

 

14.2                           Amendments.  Except as provided in this Paragraph 14.2
and in Paragraphs 1.5 and 5.2, this Agreement may be amended only by mutual,
written consent of Blue Shield and Group’s duly authorized
representatives.  Notwithstanding the
foregoing, or if Blue Shield’s legal counsel determines in good faith that this
Agreement must be modified to be in compliance with applicable federal or state
law or to meet the requirements of accreditation organizations which accredit
Blue Shield and its providers, Blue Shield may amend this Agreement by
delivering to Group (the “Notice Date”) a copy of the modifications (the
“Legally-Required Modifications”) along with the reasons therefore, and such
modification(s) shall be deemed accepted by Group and an amendment to this
Agreement if Group does not, within thirty (30) days following said Notice
Date, deliver to Blue Shield its written objection of such Legally- Required
Modification(s).  In the event that
Group timely objects to such Legally-Required Amendment, then Group and Blue
Shield shall confer in good faith regarding the amendment.  In the event Group and Blue Shield cannot
resolve Group’s objection, Group may terminate this Agreement on ninety (90)
days prior written notice to Blue Shield and the amendment to which Group
objected shall not be effective as to Group during the termination notice
period.

 

34

 

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

 

14.4                           Independent
Contractors.  In
the performance of each party’s work, duties, and obligations pursuant to this
Agreement, each of the parties shall at all times be acting and performing as
an independent contractor, and nothing in the Agreement shall be construed or
deemed to create a relationship of employer and employee or partner or joint
venturer or principal and agent.  Each
party agrees to indemnify, defend and hold harmless the other party from any
claims, causes of action or costs, including reasonable attorneys’ fees,
arising out of the indemnifying parties alleged or actual negligence or
otherwise improper performance of its obligations hereunder.

 

14.5                           Notices.  Any notices or other communication made or
contemplated by this Agreement to be in writing shall be deemed to have been
received by the party to whom it is addressed three (3) days after it is
deposited in the United States mail, certified postage prepaid, return receipt
requested, or the date of delivery by Federal Express or similar commercial
courier service, and addressed as set forth in Exhibit A., or to such other address
as either party from time to time informs the other in writing.  Further, notice may be given during normal
business hours by facsimile transmission to the number set forth in Exhibit A,
which shall be deemed received upon facsimile transmission confirmation, or by
personal delivery to the address set forth in Exhibit A, which shall be deemed
received upon receipt of a signature from the person or office at the
designated address.

 

14.6                           Third
Party Beneficiaries. 
Except as set forth in Paragraph 2.10, neither Members nor any other
third parties are intended by the parties hereto to be third party
beneficiaries under this Agreement, and no action to enforce the terms of this
Agreement may be brought against either party by any person who is not a party
hereto.

 

14.7                           Assignment.
Subcontracting, and
Addition of PCPs.

 

(a)                                  Neither Blue Shield nor Group shall assign,
transfer, or subcontract its rights, duties, or obligations under this
Agreement without the prior written consent of the other party.

 

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

 

35

 

14.8                           Interpretation
of Agreement.  In
the event of any ambiguity in this Agreement, this Agreement shall be
interpreted according to its fair intent and not for or against any one party
on the basis of which party drafted the Agreement.  This Agreement shall be governed in all respects, whether as to
validity, construction, capacity, performance or otherwise, by the laws of the
State of California and such federal laws as are applicable to Blue
Shield.  If for any reason any provision
of this Agreement is held invalid, the remaining provisions shall remain in
full force and effect.  The captions
herein are for convenience only and shall not affect the meaning or
interpretation of the Agreement.

 

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

 

14.10                     Non-Solicitation.  During the term of this
Agreement, and for one (1) year thereafter, neither Group nor Group Providers
shall solicit, induce, or encourage any Member to disenroll from Blue Shield or
select another health care service plan for healthcare services.  Notwithstanding the foregoing, Group and
Group Providers shall be entitled to freely communicate with Members regarding
any aspect of their health status or treatment.

 

14.11                     Association
Disclosure. 
Group hereby expressly acknowledges its understanding that this
Agreement constitutes a contract between Group and Blue Shield, that Blue
Shield is an independent corporation operating under a license from the Blue
Cross and Blue Shield Association, an association of independent Blue Cross and
Blue Shield Plans (“the Association”) permitting Blue Shield to use the Blue
Shield Service Mark in the State of California, and that Blue Shield is not
contracting as the agent of the Association. 
Group further acknowledges and agrees that it has not entered into this
Agreement based upon representations by any person other than Blue Shield and
that no person, entity, or organization other than Blue Shield shall be held
accountable or liable to Group for any of Blue Shield’s obligations to Group
created under this Agreement.  This
paragraph shall not create any additional obligations whatsoever on the part of
Blue Shield other than those obligations created under other provisions of this
Agreement.

 

36

 

IN
WITNESS WHEREOF, the parties have caused this Agreement to be executed by their
authorized representatives:

 

	
  BLUE SHIELD OF CALIFORNIA

  	
  PROSPECT HEALTHS GROUP MEDICAL

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Signature:

  	
  /s/ Lisa Farnan

  	
   

  	
  Signature:

  	
  /s/ Peter Goll

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Print Name:

  	
  Lisa Farnan

  	
   

  	
  Print Name:

  	
  Peter Goll

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
  Vice President, Provider Relations

  	
   

  	
  Title:

  	
  Senior Vice President, Business

  Development

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
  9-25-03

  	
   

  	
  Date:

  	
  9-17-03

  

 

 

	
  GROUP TAX I.D. NUMBER:

  	
   

  	
  95-4831101

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  GROUP IS A:

  	
   

  	
  ý

  	
   

  	
  IPA

  	
   

  	
  o

  	
  Ltd. Knox-Keene Licensee

  
	
   

  	
   

  	
  o

  	
   

  	
  Integrated Medical Group

  	
   

  	
  o

  	
  Other (Specify):

  
	
   

  	
   

  	
  o

  	
   

  	
  Foundation

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  IN RESPECT TO THE PROFESSIONAL STOP LOSS COVERAGE (AND
  APPLICABLE CHARGES BY PLAN), THE GROUP ELECTS AS FOLLOWS:

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  The Professional Stop Loss Coverage set forth in
  Schedule I:

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Will Participate

  	
   

  	
  o

  	
   

  	
  ý

  	
  Will NOT Participate

  
																				

 

37

 

Exhibit A

 

HMO
IPA/Medical Group Agreement

GROUP
INFORMATION & BENEFIT PROGRAMS

 

Name of Group: 
Prospect Health Source Medical Group

 

Effective Date: 
07/01/2003

 

1.                                       Address
for Notice:

 

	
   

  	
  If to Blue Shield

  	
   

  	
  If to Group

  
	
   

  	
  Blue Shield of California

  	
   

  	
  Prospect Health Source Medical Group

  
	
   

  	
  6701 Center Drive West

  	
   

  	
  1920
  E. 17th Street, #200

  
	
   

  	
  Los Angeles, CA 90045

  	
   

  	
  Santa Ana, CA 92705

  
	
   

  	
  Attn: Lisa Farnan

  	
   

  	
  Attn: Peter Goll

  
	
   

  	
  Fax No. :415-229-6290

  	
   

  	
  Fax No: 310-338-1124

  

 

2                                          (a)                                  Group
Regions:

 

(b)                                 Zip Codes (By Group Regions, if applicable)*:

 

3.                                       Benefit Programs: This Agreement is applicable to the
following Benefit Programs:

 

(1)                                  Commercial Group, Point of Service and
Individual Plans, including
Healthy Families     ý  Yes   o  No

 

(2)                                  Blue
Shield 65 Plus (Medicare+Choice)     o  Yes   ý  No

 

	
  (3)

  	
   

  	
  Other
  (Describe)

  	
   

  
	
   

  	
   

  	
   

  

 

*                                         For Blue Shield 65+, Members will be
permitted to select Group and its Primary Care Physicians if they reside
anywhere within the Medicare contract service area in which Group is located,
in accordance with Medicare guidelines.

 

 

38

 

Exhibit B

 

HMO
IPA/Medical Group Agreement

DIVISION OF
FINANCIAL RESPONSIBILITIES

 

Name of Group: 
Prospect Health Source Medical Group

 

Effective Date: 
July 1, 2003

 

 

Pursuant
to the disclosure requirements as set forth in Title 28, California Code of
Regulations § 1300.75.4.l (a), the attached Division of Financial
Responsibility (DOFR), informs Group of the allocation of financial risk
assumed under the contract.  The matrix details
the responsibility for medical expenses, including physician, institutional and
ancillary costs, which will be allotted to the group, the hospital, the plan
and any shared risk funds.

 

Note: AB 2420 (The Richman Bill), which allows Medical Groups to
exclude risk for injectable drugs administered in the physician’s office, does
not apply to BSC Medicare 65 Plus. 
Financial responsibility for these drugs remain Medical Group or Shared
Savings responsibility as indicated below.

 

 

SEE
FOLLOWING PAGES FOR

DIVISION
OF FINANCIAL RESPONSIBILITIES

CHART

 

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

 

39

 

	
  SERVICES

  	
   

  	
  MEDICAL

  GROUP

  	
   

  	
  SHARED

  SAVINGS

  	
   

  	
  BLUE

  SHIELD

  
	
  PREVENTIVE
  SERVICES

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •                  Health
  Education/Promotion

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  Immunizations/Serum:

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •                  Adult Immunizations

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •                  Childhood Immunizations first
  recommended for use

  by the American Academy of Pediatrics on or after

  1/1/01 and Prevnar

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •                  Other Childhood Immunizations

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •                  Routine Physical Exams

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •                  Vision/Hearing Screenings

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  HEALTH
  CARE PROFESSIONAL

  (OUTPATIENT
  AND OFFICE)

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  •                  Administration – injectable drugs
  and immunization mono-globulins

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •                  Allergy Testing/Serum

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •                  Amniocentesis

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •                  Biofeedback

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •                  Chiropractic (Non-Rider Benefit)

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •                  Diagnosis, Therapy, Treatment &
  Triage

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •                  Emergency Services Within Service
  Area or at nearest

  designated trauma center

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •                  Emergency Services Outside Service
  Area - (or

  designated trauma center) — Commercial Members

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •                  Office Visit Supplies (Splints,
  Casts, Bandages, Dressings, etc.)

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •                  Office Visits/Consultation/Surgery

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •                  Pathology/Radiology/Anesthesia
  (including Dental)

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •                  Patient Counseling

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  

 

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

 

40

 

	
  SERVICES

  	
   

  	
  MEDICAL

  GROUP

  	
   

  	
  SHARED

  SAVINGS

  	
   

  	
  BLUE

  SHIELD

  
	
  •                  Podiatry

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •                  Pre-and
  Post-Transplant Services

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •                  Acute Detox

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •                  Psychiatric/Substance Abuse –
  Commercial Members

  whose benefits renew or become effective on or after

  7/1/00.

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •                  Urgent Care Services

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  HEALTH
  CARE PROFESSIONAL (INPATIENT)

  	
   

  	
   

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •                  Diagnosis, Treatment & Therapy

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •                  Emergency Services Within Service
  Area

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •                  Emergency Services Outside Service
  Area – Commercial

  Members

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •                  Pathology/Radiology/Anesthesia

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •                  Transplant (all inclusive case
  rates)

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •                  Transplant (physician fees excluded
  from case rate

  payment)

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •                  Urgent Care Services

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •                  Visits/Consultations/Surgery

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  FACILITY
  SERVICES (INPATIENT)

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •                  Emergency Services Within Service
  Area

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •                  Emergency Services Outside Service
  Area - Commercial Members

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •                  Facility and Supplies

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •                  Acute Detox

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •                  Psychiatric/Substance Abuse for
  Commercial Members

  whose benefits have not been renewed since 7/1/00.

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •                  Psychiatric/Substance Abuse-
  Commercial Members

  whose benefits renew or become effective on or after

  7/1/00.

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •                  Take Home Drugs

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •                  Transplant

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •                  Urgent Care Services

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  

 

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

 

41

 

	
  SERVICES

  	
   

  	
  MEDICAL

  GROUP

  	
   

  	
  SHARED

  SAVINGS

  	
   

  	
  BLUE

  SHIELD

  
	
  FACILITY
  SERVICES (OUTPATIENT)

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •                  Chemotherapy/Chemotherapy
  Drugs

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •                  Detox

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •                  Diagnostic Testing

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •                  Emergency Services Within Service
  Area

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •                  Emergency Services Outside Service
  Area – Commercial

  Members

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •                  Endoscopic
  Studies not performed in physician’s office

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •                  False Labor OB Check at Hospital

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •                  Fetal Genetic Testing

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •                  Fetal Monitoring

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •                  Invasive Cardiology

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •                  Lab/Radiology/Ancillary Services

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •                  Lithotripsy

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •                  Other Services

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •                  Pre and Post Transplant Services

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •                  Pre-admission Testing

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •                  Psychiatric/Substance Abuse Day
  Treatment –

  Commercial Members whose benefits renew or become

  effective on or after 7/1/00.

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •                  Psychiatric/Substance Abuse O/P
  Counseling –

  Commercial Members whose benefits renew or become

  effective on or after 7/1/00.

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •                  Radiation Therapy

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •                  Renal Dialysis

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •                  Surgery/Surgical Procedures
  (Including Laser)

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •                  Urgent Care Services

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  PREGNANCY AND
  MATERNITY CARE

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •                  Alternate Birth Center

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •                  Normal Delivery/C-Section

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •                  Prenatal/Postnatal Visits

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  

 

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

 

42

 

	
  SERVICES

  	
   

  	
  MEDICAL

  GROUP

  	
   

  	
  SHARED

  SAVINGS

  	
   

  	
  BLUE

  SHIELD

  
	
  FAMILY
  PLANNING

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •                  Abortions

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •                  Counseling

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •                  Infertility (Diagnostics/Treatment
  - Limited Benefits)

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •                  Tubal Ligation

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •                  Vasectomy

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  DENTAL
  SERVICES

  (FOR REPAIR OF ACCIDENT/INJURY ONLY)

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •                  Facility

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •                  Professional

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  BLOOD

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •                  Blood Transfusions

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •                  Blood/Blood Products (Autologous)

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •                  Blood/Blood Products from Blood
  Bank

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •                  Clotting Factors

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  SKILLED
  NURSING FACILITY CARE (SNF)

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •                  Facility

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •                  Professional

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  INSTITUTIONAL
  HOSPICE

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •                  Facility

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •                  Professional

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  MEDICATIONS

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •                  Facility Take Home Drugs

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •                  Outpatient Prescription Drugs

  (Excluding Take Home, Injectables, & Blue Shield 65+)

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •                  Therapeutic Injectables provided in
  MD office and other

  therapeutic injectables in an implantable dosage form not

  already specified in this DOFR

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •                  High-Cost Injectables greater than
  $10,000 administered

  in MD Office as outlined in the Provider Manual

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  

 

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

 

43

 

	
  SERVICES

  	
   

  	
  MEDICAL

  GROUP

  	
   

  	
  SHARED

  SAVINGS

  	
   

  	
  BLUE

  SHIELD

  
	
  •                  Chemotherapeutic Injectables
  provided in MD office

  (includes some Chemo-Injectables listed under High-Cost

  Injectables exclusion)

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •                  Chemo-adjunct
  injectable therapies for side effects

  provided in MD office

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •                  Therapeutic Injectables provided
  for self-administration

  as home use, either through contracted Alternate Care

  Services Provider, a Plan contracted pharmacy or Home

  Health Agency.

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  VISION
  CARE

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •                  Implanted Lenses (Cataract Surgery)

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •                  Lenses and Frames Incident to
  Cataract Surgery

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •                  Non-Cataract Related Rx Lenses and
  Frames

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •                  Vision Screening

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  HOME
  HEALTH CARE (HHC) & HOME HOSPICE

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •                  Agency Visit

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •                  Home Medical Equipment (HME)

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •                  Medical Supplies/IV Solutions
  Associated with HHC

  Treatment Blue Shield

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •                  Physician Home Visit

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •                  Licensed Per Diem Hospice

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  REHAB
  THERAPY (PT, ST, OT, RT, CARDIAC)

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •                  Inpatient

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •                  Outpatient

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  OTHER
  SERVICES

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •                  Colostomy/Ostomy
  Supplies/Parental/Enteral Nutritional

  Supplements (OP)

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •                  Diabetic glucose testing machines, insulin
  pump &

  syringes

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •                  Disposable Diabetic Testing
  Supplies

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •                  Insulin

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  

 

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

 

44

 

	
  SERVICES

  	
   

  	
  MEDICAL

  GROUP

  	
   

  	
  SHARED

  SAVINGS

  	
   

  	
  BLUE

  SHIELD

  
	
  •                  Orthotics/Prostheses (External) –
  Commercial -$50 or

  Under

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •                  Orthotics/Prostheses
  (External) - Commercial –Over $50

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •                  Surgically Implanted Devices

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •                  Cancer Clinical Trials and all Covered
  Services directly

  relating to the provision of the said trials – Commercial.

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  AMBULANCE

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •                  In Area

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •                  Out of Area

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  OPTIONAL
  BENEFITS

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •                  Acupuncture Rider

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •                  Chiropractic Rider

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •                  Dental Rider

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •                  Outpatient Prescription Drug Rider

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •                  Hearing Aids

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •                  Infertility Rider (Gifts, etc.)

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •                  Podiatric Rider

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •                  Vision Rider

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  

 

NOTE:  This is intended only as summaries guide of
financial responsibility as stated in the contract.  It is not possible to list all medical services.  If you have any questions as to the
financial responsibility for a service not listed above, Blue Shield follows
Medicare guidelines for all product lines. 
Services covered under Medicare Part A are Shared Savings Fund
responsibility and services covered under Medicare Part B are Medical Group
responsibility.

 

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

 

45

 

Exhibit B-1

 

Injectables
Notification/Waiver

 

The Richman Bill (AB
2420), mandates that health plans can no longer require IPA/Medical Groups to
assume financial responsibility for injectable drugs over $250 per dose for
Commercial Members.  This new law will
be effective for provider contracts issued, amended, delivered or renewed on or
after July 1, 2003.

 

Unless the IPA/Medical
Group is willing to accept risk for these services, the Richman Bill requires
that risk for injectables such as chemotherapy/adjunctive chemotherapy,
hemophilia drugs, transplant drugs, adult vaccines, self-injectable medication
and other office injectables be assigned to the Plan.  The Bill does not apply to home-infusion drugs.

 

Signature below
constitutes Provider’s acceptance or non-acceptance of injectables risk as well
as full understanding of Provider’s rights under AB 2420 as outlined by Plan.

 

 

	
  Group
  Agrees to Waive Rights under AB2420-

  	
  Name:  Peter Goll

  	
   

  	
   

  
	
  Richman
  Bill and accept some or all financial

  	
  Title:
  Senior VP Business Development

  	
   

  
	
  risk
  for Injectable drugs:

  	
  Signature:

  	
  /s/ Peter Goll

  	
   

  
	
   

  	
  Date:

  	
  9-17-03

  	
   

  
	
   

  	
   

  
	
  Group
  Agrees to Exercise all Rights under

  	
  Name:

  	
   

  	
   

  
	
  AB2420-Richman
  Bill and will not accept risk

  	
  Title:

  	
   

  	
   

  
	
  for
  any Injectable drugs covered by this

  	
  Signature:

  	
   

  	
   

  
	
  legislation.

  	
  Date:

  	
   

  	
   

  
											

 

 

46

 

Exhibit C

 

HMO
IPA/Medical Group Agreement

CAPITATION

 

Name of Group: 
Prospect Health Source Medical Group

 

Effective Date: 
07/01/2003

 

CAPITATION
PAYMENTS:  Pursuant
to Article VII of the Agreement, Blue Shield shall pay to Group, based
upon the Member’s Benefit Program, the monthly per member per month (PMPM)
Capitation set forth in Exhibit C-l hereto. 
Capitation for non-Blue Shield 65 Plus Members is a specified dollar
rate based upon the Member’s benefit plan design, including co-payment levels
and age/sex category.  Per Exhibit C-l,
the capitation rate for each member is a product of the Member’s age/sex
category multiplied by the corresponding base rate multiplied by the applicable
co-pay adjustment factor.  The sum of
the individual capitation rates for assigned Members will be added to determine
the Group’s aggregate Capitation payable for any given month.  Capitation for Blue Shield 65 Plus Members
is a percentage of the Medicare premium received by Blue Shield from CMS for
the basic medical benefits for such Members and excludes any premium paid by
CMS, the Member or an Employer Group for rider benefits that are not the
financial responsibility of Group.

 

Information
on actuarial cost and utilization assumptions, as required by Subchapter 5.5 of
Chapter 3 of Title 28, California Code of Regulations § 1300.75.4.1 (a) is
further described in the Provider Manual and is updated at least annually.  The information presented therein regarding
cost and utilization is provided by way of example only and is based broadly on
historical data in Blue Shield’s possession. 
It is not a statement of fact or opinion of what will actually occur and
is not offered as an accurate predictor of the experience of any specific
Group.  It is not intended to reflect
the actual cost or utilization incurred by any specific Group, does not predict
the actual costs to any specific group or patient mix, and has not been risk
adjusted in any way (capitation adjustments for age, sex and benefit plan
design are reflected in this Exhibit C.). 
Group recognizes that its actual utilization and unit costs will likely
differ from the examples given and could be higher or lower.  Group should not rely on this information in
evaluating its own financial risk, but, rather, should review its own patient
mix, utilization and cost information as well as other available information,
consult with its own financial and actuarial advisors in evaluating the
information contained herein, and make its own independent business judgment in
deciding to enter into the financial risk arrangements under the Agreement
based on its own independent assessment.

 

ENCOUNTER DATA SUBMISSION PENALTIES:  In the event
that Group fails to comply with the encounter data submission requirements
described in Paragraph 2.12 hereof, then the amounts to be deducted or withheld
from Group’ Capitation on a monthly basis as provided in Paragraph 7.11 hereof
are identified in Exhibit C-l as “Penalties for Deficient Encounter Data
Submission”.

 

 

47

 

Exhibit C-1

HMO
IPA/Medical Group Agreement

Capitation
Rates for Prospect Health Source Medical Group

Effective
Date: 07/01/2003

 

As of
07/01/2003, the effective net yield (which includes the deduction for Stop
Loss, if applicable) for the following PMPMs and factors are *** for the HMO
Group, *** for HMO IFP, *** for POS, *** for the PERS Group, and *** pmpm in
aggregate, based on the 02/01/2003 membership.

 

The
actual capitation payment for each month will be calculated based on the actual
member mix for each age/sex/copay level category.

 

A.
Members Other Than Blue Shield 65 Plus Members

 

Age
& Sex Categories and Capitation Fees

 

	
   

  	
   

  	
  Age/Sex Adjusted
  Capitation (PMPM)

  	
   

  	
  Benefit / Rate Adjustment

  Office Visit Copay Factor

  	
   

  
	
  Category

  	
   

  	
  Group

  (non-POS)

  	
   

  	
  IFP

  (non-POS)

  	
   

  	
  POS

  (In-network)

  	
   

  	
  PERS

  (non-POS)

  	
   

  	
  Office Visit

  Copay

  	
   

  	
  Factor

  	
   

  
	
  Sex

  	
   

  	
  Age

  
	
  F

  	
   

  	
  0 - 1

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  1.081

  	
   

  
	
  F

  	
   

  	
  2 - 6

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  1.071

  	
   

  
	
  F

  	
   

  	
  7 - 18

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  1.061

  	
   

  
	
  F

  	
   

  	
  19 - 21

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  1.052

  	
   

  
	
  F

  	
   

  	
  22 - 24

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  1.043

  	
   

  
	
  F

  	
   

  	
  25 - 29

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  1.034

  	
   

  
	
  F

  	
   

  	
  30 - 34

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  1.026

  	
   

  
	
  F

  	
   

  	
  35 - 39

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  1.017

  	
   

  
	
  F

  	
   

  	
  40 - 44

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  1.009

  	
   

  
	
  F

  	
   

  	
  45 - 49

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  1.001

  	
   

  
	
  F

  	
   

  	
  50 - 54

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  0.994

  	
   

  
	
  F

  	
   

  	
  55 - 59

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  0.986

  	
   

  
	
  F

  	
   

  	
  60 - 64

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  0.979

  	
   

  
	
  F

  	
   

  	
  65 + (NM)

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  0.972

  	
   

  
	
  F

  	
   

  	
  65 + (M)*

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  0.965

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  0.958

  	
   

  
	
  M

  	
   

  	
  0 - 1

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  0.951

  	
   

  
	
  M

  	
   

  	
  2 - 6

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  0.944

  	
   

  
	
  M

  	
   

  	
  7 - 18

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  0.937

  	
   

  
	
  M

  	
   

  	
  19 - 21

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  0.930

  	
   

  
	
  M

  	
   

  	
  22 - 24

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  0.923

  	
   

  
	
  M

  	
   

  	
  25 - 29

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  0.917

  	
   

  
	
  M

  	
   

  	
  30 - 34

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  0.910

  	
   

  
	
  M

  	
   

  	
  35 - 39

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  0.903

  	
   

  
	
  M

  	
   

  	
  40 - 44

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  0.897

  	
   

  
	
  M

  	
   

  	
  45 - 49

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  0.890

  	
   

  
	
  M

  	
   

  	
  50 - 54

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  0.858

  	
   

  
	
  M

  	
   

  	
  55 - 59

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  0.825

  	
   

  
	
  M

  	
   

  	
  60 - 64

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  0.793

  	
   

  
	
  M

  	
   

  	
  65 + (NM)

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  0.760

  	
   

  
	
  M

  	
   

  	
  65 + (M)*

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  0.728

  	
   

  

 

* = Medicare Primary

 

***  All references to the capitation rates have
been deleted.

 

48

 

Exhibit
C-1

HMO
IPA/Medical Group Agreement

Capitation
Rates for Prospect Health Source

Effective
Date: 07/01/2004

 

As of
07/01/2004, the effective net yield (which includes the deduction for Stop
Loss, if applicable) for the following PMPMs and factors are *** for the HMO
Group, *** for HMO IFP, *** for POS, *** for the PERS Group, and *** pmpm in
aggregate, based on the 02/01/2003 membership.

 

The
actual capitation payment for each month will be calculated based on the actual
member mix for each age/sex/copay level category.

 

A.
Members Other Than Blue Shield 65 Plus Members

 

Age
& Sex Categories and Capitation Fees

 

	
   

  	
   

  	
  Age/Sex Adjusted
  Capitation (PMPM)

  	
   

  	
  Benefit / Rate Adjustment

  Office Visit Copay Factor

  	
   

  
	
  Category

  	
   

  	
  Group

  (non-POS)

  	
   

  	
  IFP

  (non-POS)

  	
   

  	
  POS

  (In-network)

  	
   

  	
  PERS

  (non-POS)

  	
   

  	
  Office Visit

  Copay

  	
   

  	
  Factor

  	
   

  
	
  Sex

  	
   

  	
  Age

  
	
  F

  	
   

  	
  0 - 1

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  1.081

  	
   

  
	
  F

  	
   

  	
  2 - 6

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  1.071

  	
   

  
	
  F

  	
   

  	
  7 - 18

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  1.061

  	
   

  
	
  F

  	
   

  	
  19 - 21

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  1.052

  	
   

  
	
  F

  	
   

  	
  22 - 24

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  1.043

  	
   

  
	
  F

  	
   

  	
  25 - 29

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  1.034

  	
   

  
	
  F

  	
   

  	
  30 - 34

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  1.026

  	
   

  
	
  F

  	
   

  	
  35 - 39

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  1.017

  	
   

  
	
  F

  	
   

  	
  40 - 44

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  1.009

  	
   

  
	
  F

  	
   

  	
  45 - 49

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  1.001

  	
   

  
	
  F

  	
   

  	
  50 - 54

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  0.994

  	
   

  
	
  F

  	
   

  	
  55 - 59

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  0.986

  	
   

  
	
  F

  	
   

  	
  60 - 64

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  0.979

  	
   

  
	
  F

  	
   

  	
  65 + (NM)

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  0.972

  	
   

  
	
  F

  	
   

  	
  65 + (M)*

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  0.965

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  0.958

  	
   

  
	
  M

  	
   

  	
  0 - 1

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  0.951

  	
   

  
	
  M

  	
   

  	
  2 - 6

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  0.944

  	
   

  
	
  M

  	
   

  	
  7 - 18

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  0.937

  	
   

  
	
  M

  	
   

  	
  19 - 21

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  0.930

  	
   

  
	
  M

  	
   

  	
  22 - 24

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  0.923

  	
   

  
	
  M

  	
   

  	
  25 - 29

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  0.917

  	
   

  
	
  M

  	
   

  	
  30 - 34

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  0.910

  	
   

  
	
  M

  	
   

  	
  35 - 39

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  0.903

  	
   

  
	
  M

  	
   

  	
  40 - 44

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  0.897

  	
   

  
	
  M

  	
   

  	
  45 - 49

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  0.890

  	
   

  
	
  M

  	
   

  	
  50 - 54

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  0.858

  	
   

  
	
  M

  	
   

  	
  55 - 59

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  0.825

  	
   

  
	
  M

  	
   

  	
  60 - 64

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  0.793

  	
   

  
	
  M

  	
   

  	
  65 + (NM)

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  0.760

  	
   

  
	
  M

  	
   

  	
  65 + (M)*

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  0.728

  	
   

  

 

* = Medicare Primary

 

***  All references to the capitation rates have
been deleted.

 

49

 

The
preceding capitation rates do not apply to Members enrolled through the Healthy
Families Program. For Healthy Family Program Members, the following capitation
rates shall apply:

 

	
  Age 0 – 11. 99 months

  	
   

  	
  ***
  PMPM

  
	
  Age 1 year –18 years 11.99 mos.

  	
   

  	
  ***
  PMPM

  

 

B.                                    BLUE SHIELD 65 PLUS MEMBERS
– BASIC CAPITATION

 

Not
Applicable

 

C.                                    PENALTIES FOR DEFICIENT
ENCOUNTER DATA SUBMISSION

If
minimum submission requirements are not met, as defined in the Provider Manual,
and are not corrected within a thirty (30) day notice period, Group shall be
subject to a penalty of three percent (3%) of the Group’s commercial capitation
payment and, if applicable, one percent (1%) of the Group’s Blue Shield 65 Plus
capitation payment for the period(s) in question from the monthly capitation
payments until the deficiency is corrected.

 

50

 

Exhibit D

 

HMO IPA/Medical Group Agreement

SHARED SAVINGS PROGRAMS

 

	
  Name of Group:

  	
  Prospect Health Source Medical Group

  
	
   

  	
   

  
	
  Effective Date:

  	
  07/01/2003

  

 

A.                                    COMMERCIAL MEMBERS

 

FUNDING:
For Members other than those enrolled in Blue Shield 65 Plus plans and Blue
Shield POS Benefit Programs, Blue Shield will allocate to a Shared Savings Fund
a per Member per month amount set forth in Exhibit D-l for all Members assigned
to Group, subject to retroactive adjustments either upward or downward due to
retroactive changes in membership. [See Exhibit G-2 for provisions relating to
Blue Shield POS Benefit Programs and POS Shared Savings Funds.]

 

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

 

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

 

 

51

 

SURPLUS:
If the total actual cost of Shared Savings Services is less than the total
allocation to the Shared Savings Fund, then Group shall be entitled to fifty percent (50%) of the amount by which
the allocation exceeds the costs, not to exceed twenty-five percent (25%) of the total Physician Group
Capitation for the shared risk period, minus any carry forward resulting from
deficits from previous Agreement years.

 

DEFICIT:
If the total actual cost of Shared Savings services is more than the total
allocation to the Shared Savings Fund, then fifty
percent (50%) of the amount by which the actual costs exceed the
total allocation, not to exceed ten percent
(10%) of the total Physician Group capitation for the shared risk
period, shall be allocated to Group and shall be handled as follows: (i) the
excess may be deducted from any other settlements or payments, except
capitation and Professional Stop Loss Program payments made pursuant to Exhibit
H, due to Group from Blue Shield, and, (ii) any remaining amounts shall be carried
forward into future Agreement years and shall be deducted from any Shared
Savings payments to Group in future years.

 

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

 

B.                                    BLUE SHIELD 65 PLUS MEMBERS

 

Not
Applicable

 

C.                                    PHARMACY SHARED SAVINGS FUND

 

Not
Applicable

 

52

 

Exhibit D-1

HMO
IPA/Medical Group Agreement

SHARED
SAVINGS FUND ALLOCATIONS

Effective
Date: 07/01/03

 

As of 07/01/2003, the effective net yield (which includes the
deduction for Stop Loss, if applicable) for the following PMPMs are *** for the
HMO Group, *** for HMO IFP, and *** for the HMO PERS based on the 02/01/2003
membership.

 

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

 

Members
Other Than Blue Shield 65 Plus Members

 

Age
& Sex Categories and Shared Savings Allocations

 

	
   

  	
   

  	
  Shared Savings Allocation
  (PMPM)

  	
   

  
	
  Category

  	
   

  	
  Group

  (non-POS)

  	
   

  	
  IFP

  (non-POS)

  	
   

  	
  PERS

  (non-POS)

  	
   

  
	
  Sex

  	
   

  	
  Age

  
	
  F

  	
   

  	
  0 - 1

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  F

  	
   

  	
  2 - 6

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  F

  	
   

  	
  7 - 18

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  F

  	
   

  	
  19 - 21

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  F

  	
   

  	
  22 - 24

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  F

  	
   

  	
  25 - 29

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  F

  	
   

  	
  30 - 34

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  F

  	
   

  	
  35 - 39

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  F

  	
   

  	
  40 - 44

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  F

  	
   

  	
  45 - 49

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  F

  	
   

  	
  50 - 54

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  F

  	
   

  	
  55 - 59

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  F

  	
   

  	
  60 - 64

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  F

  	
   

  	
  65 + (NM)

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  F

  	
   

  	
  65 + (M)*

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  M

  	
   

  	
  0 - 1

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  M

  	
   

  	
  2 - 6

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  M

  	
   

  	
  7 - 18

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  M

  	
   

  	
  19 - 21

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  M

  	
   

  	
  22 - 24

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  M

  	
   

  	
  25 - 29

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  M

  	
   

  	
  30 - 34

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  M

  	
   

  	
  35 - 39

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  M

  	
   

  	
  40 - 44

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  M

  	
   

  	
  45 - 49

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  M

  	
   

  	
  50 - 54

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  M

  	
   

  	
  55 - 59

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  M

  	
   

  	
  60 - 64

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  M

  	
   

  	
  65 + (NM)

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  M

  	
   

  	
  65 + (M)*

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  

 

* = Medicare Primary

 

***  All references to the Shared Savings Fund
Allocations have been deleted.

 

53

 

Exhibit
D-1

HMO
IPA/Medical Group Agreement

SHARED
SAVINGS FUND ALLOCATIONS

Effective
Date: 07/01/04

 

As of
07/01/2004, the effective net yield (which includes the deduction for Stop
Loss, if applicable) for the following PMPMs are *** for the HMO Group, *** for
HMO IFP, and *** for the HMO PERS based on the 02/01/2003 membership.

 

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

 

Members
Other Than Blue Shield 65 Plus Members

 

Age
& Sex Categories and Shared Savings Allocations

 

	
   

  	
   

  	
  Shared Savings Allocation
  (PMPM)

  	
   

  
	
  Category

  	
   

  	
  Group

  (non-POS)

  	
   

  	
  IFP

  (non-POS)

  	
   

  	
  PERS

  (non-POS)

  	
   

  
	
  Sex

  	
   

  	
  Age

  
	
  F

  	
   

  	
  0 - 1

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  F

  	
   

  	
  2 - 6

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  F

  	
   

  	
  7 - 18

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  F

  	
   

  	
  19 - 21

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  F

  	
   

  	
  22 - 24

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  F

  	
   

  	
  25 - 29

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  F

  	
   

  	
  30 - 34

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  F

  	
   

  	
  35 - 39

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  F

  	
   

  	
  40 - 44

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  F

  	
   

  	
  45 - 49

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  F

  	
   

  	
  50 - 54

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  F

  	
   

  	
  55 - 59

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  F

  	
   

  	
  60 - 64

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  F

  	
   

  	
  65 + (NM)

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  F

  	
   

  	
  65 + (M)*

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  M

  	
   

  	
  0 - 1

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  M

  	
   

  	
  2 - 6

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  M

  	
   

  	
  7 - 18

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  M

  	
   

  	
  19 - 21

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  M

  	
   

  	
  22 - 24

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  M

  	
   

  	
  25 - 29

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  M

  	
   

  	
  30 - 34

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  M

  	
   

  	
  35 - 39

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  M

  	
   

  	
  40 - 44

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  M

  	
   

  	
  45 - 49

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  M

  	
   

  	
  50 - 54

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  M

  	
   

  	
  55 - 59

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  M

  	
   

  	
  60 - 64

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  M

  	
   

  	
  65 + (NM)

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  M

  	
   

  	
  65 + (M)*

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  

 

* = Medicare Primary

 

***  All references to the Shared Savings Fund
Allocations have been omitted.

 

 

54

 

Exhibit D-2

 

HMO
IPA/Medical Group Agreement

SHARED SAVINGS FUND ALLOCATIONS

 

	
  Name of Group:

  	
  Prospect Health Source Medical Group

  
	
   

  	
   

  
	
  Effective Date:

  	
  07/01/2003

  

 

BLUE SHIELD 65 PLUS MEMBERS

 

Not
Applicable

 

 

55

 

Exhibit D-3

 

HMO
IPA/Medical Group Agreement

PHARMACY SHARED SAVINGS FUND ALLOCATIONS

 

	
  Name of Group:

  	
  Prospect Health Source Medical Group

  
	
   

  	
   

  
	
  Effective Date:

  	
  07/01/2003

  

 

BLUE SHIELD 65 PLUS MEMBERS

 

Not
Applicable

 

***  Confidential Treatment requested

 

56

 

Exhibit E

 

HMO
IPA/Medical Group Agreement

BLUE SHIELD ALLOWABLE RATES

 

	
  Name of Group:

  	
  Prospect Health Source Medical Group

  
	
   

  	
   

  
	
  Effective Date:

  	
  07/01/2003

  

 

The
following shall constitute Blue Shield Allowable Rates to be paid to Group or
Group Providers for Reciprocity (Paragraph 2.10), Retroactive Deletions
(Paragraph 6.3(b)), and Services Other Than Capitated Professional Services
(Paragraph 7.2):

 

The lesser of ninety percent (90%) of the Blue Shield PPO Physician
Allowances in effect on the date of service, or the amount paid by the Group
(or Group Provider) for the services, if any, (excluding Capitation payment),
minus the Member’s/individual’s applicable copayment, coinsurance or
deductible. Further detail regarding Blue Shield’s proprietary fee
schedule is provided upon request.

 

All injectable drugs excluded from Group risk as noted in Exhibit B,
shall be reimbursed by Blue Shield at “cost”. Cost is defined as Average
Wholesale Price (AWP) less fifteen percent (15%). AWP refers to the Average
Wholesale Price listed in nationally recognized pricing sources as determined
by Blue Shield, and is updated twice annually.

 

 

57

 

Exhibit F

 

HMO
IPA/Medical Group Agreement

DELEGATION RESPONSIBILITIES

 

	
  Name of Group:

  	
  Prospect Health Source Medical Group

  
	
   

  	
   

  
	
  Effective Date:

  	
  07/01/2003

  

 

1.                                       Delegation Responsibilities & Penalties. The capitation amounts paid to Group by Blue
Shield as set forth in Paragraph 7.1 (a) of this Agreement are based on Blue
Shield’s expectation that the Group accepts and will perform delegation of the
requirements set forth as Group’s responsibility in Attachments I, II, III and
IV of this Exhibit F. The quality improvement and quality management
obligations of Blue Shield are not delegated to Group; however, Group shall
have its own fully functional Quality Management Program, as described in
Attachment 1, that is cooperative with and integrated into the Blue Shield
Quality Management Program. In accordance with paragraph 4.3 (c) of this
Agreement, the net monthly capitation penalty reduction for any de-delegated
function shall be as follows:

 

	
   

  	
   

  	
  Commercial

  	
   

  	
  Blue
  Shield 65 Plus

  	
   

  
	
  UM /
  Professional

  	
   

  	
  3.0

  	
  %

  	
  3.0

  	
  %

  
	
  UM /
  Shared Savings

  	
   

  	
  3.0

  	
  %

  	
  3.0

  	
  %

  
	
  Credentialing

  	
   

  	
  0.5

  	
  %

  	
  0.5

  	
  %

  
	
  Claims
  Processing

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Non-contracted
  Only Penalty

  	
   

  	
  0.7

  	
  %

  	
  0.7

  	
  %

  
	
  All
  Claims Penalty

  	
   

  	
  7.0

  	
  %

  	
  7.0

  	
  %

  
	
  Non-contracted
  Only Payment Withhold *

  	
   

  	
  8.5

  	
  %

  	
  8.5

  	
  %

  
	
  All Claims Payment Withhold

  	
   

  	
  85.0

  	
  %

  	
  85.0

  	
  %

  

 

* Subject to actual claims paid experience.

 

1.                                       De-delegation penalties for Claims Processing
do not apply in cases where Blue Shield participates in joint administration of
claims processing on Group’s premises, however, Group shall reimburse Blue
Shield for Blue Shield’s cost of providing on site assistance and shall provide
workstations and equipment as required.

 

2.                                       De-legation Criteria and Standards. Blue Shield has developed and adopted
delegation criteria and standards for performance of delegated activities for
the delegation of utilization management, medical record audits, credentialing,
professional site reviews, and claims processing. These criteria and standards
as set forth in the Provider Manual and this Exhibit F, may be modified from
time to time by Blue Shield. Group warrants to Blue Shield that it meets the
criteria for the activities, and is willing to, and capable of, performing such
delegated activities in full compliance with the standards. Group shall

 

58

 

promptly notify Blue Shield in writing, within no less than seven (7)
business days, in the event it ceases, in whole or in part, to meet such
criteria.

 

3.                                       Blue Shield Monitoring and Oversight. Blue Shield shall be entitled to conduct
audits of Group’s compliance with the criteria and standards. Group shall
provide reasonable access during regular business hours to its claims, claims
supporting documentation, Member inquiry files, credentialing files, clinical
and medical records of Members as applicable and reasonably necessary to
evaluate Group’s performance of its delegated activities. In the event Group
has insufficient data and records relating to Members to permit Blue Shield to
evaluate a particular activity under review, then Group shall provide
sufficient documents and information on non-Members, with all non-Member
identifying information deleted to preserve the confidentiality of such
information, in order to permit Blue Shield to evaluate Group’s performance of
such activity. Group shall participate in an annual evaluation and quarterly
meetings between Blue Shield and Group staff. In addition, Group shall provide
to Blue Shield periodic reports on delegated activities as set forth in the
Provider Manual. Group shall take such corrective actions as requested by Blue
Shield through the audit review process within such time lines as established
by Blue Shield.

 

4.                                       Shared Savings Service Authorization /
Medical Policy. When
authorization responsibility for Shared Savings Services is delegated to Group,
Group shall pre-authorize Shared Savings Services (or, as appropriate,
retroactively authorize Emergency Services) and shall provide a copy of such
authorization to Blue Shield within seven (7) days following the authorization.
Group shall provide to Blue Shield weekly reports setting forth authorizations
granted and denied, as set forth in the Provider Manual. All utilization
management and authorizations of Group shall be consistent with Blue Shield’s
Medical Policy.

 

5.                                       Blue Shield Request for Records, Files and
Reports Related to Delegated Credentialing and Recredentialing. Blue Shield shall be entitled to conduct
audits of Group’s compliance with the criteria and standards of Delegated
Credentialing and Recredentialing. Group shall provide reasonable access during
regular business hours to credentialing files, as reasonably necessary to
evaluate Group’s performance of it’s delegated activities. Group shall submit
copies of credentialing/recredentialing files for review by governmental,
accrediting and regulatory review agencies. Submission of documents by Group
will be within the required timeframe of the requesting agency. Group shall
participate in an annual evaluation and quarterly meetings between Blue Shield and
Group staff. In addition, Group shall provide to Blue Shield periodic reports
on delegated activities as set forth in the Provider Manual. Group shall take
such corrective actions as requested by Blue Shield through the audit review
process within such time lines as established by Blue Shield.

 

59

 

Attachment I to Exhibit F

 

BLUE SHIELD OF CALIFORNIA

QUALITY MANAGEMENT (QM) REQUIREMENTS*

 

	
  QI Standard Per

  BSC

  	
   

  	
  Activities
  Performed

  by Group

  	
   

  	
  Group Reporting

  Frequency to BSC

  	
   

  	
  BSC
  Oversight

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.          Program Structure

  	
   

  	
  •             Written QM Program

  •             QM Program accountable to Governing Body.

  •             Program evaluated annually and
  updated.

  •             Designated physician has substantial involvement.

  •             QM committee meets quarterly, at a minimum.

  •             Annual QM work plan.

  •             Annual QM evaluation.

  	
   

  	
  •             Submit QM Program annually.

  •             Submit workplan annually.

  •             Submit program evaluation
  annually.

  	
   

  	
  1.          Review and
  approval of:

  •             Program

  •             Work plan

  •             Annual evaluation

  •             QI Policies

  •             QI Procedures

  •             Clinical Guidelines

  •             Access Guidelines

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.          Program
  Operations

  	
   

  	
  •             Provider QI Committee recommends policy decisions, reviews QI activities, institutes needed actions
  and ensures follow-up. 

  •             Contemporaneous, signed and dated
  minutes.

  •             Physicians actively participate in QI program.

  •             QI program coordinates monitoring activity throughout
  organization.

  	
   

  	
  •             Group policies and procedures
  related to QI submitted annually and any updates and changes submitted
  quarterly.

  •             Annual Report to include monitoring
  activities and results, and improvements.

  	
   

  	
  •             Annual on-site assessment to
  include review of minutes.

  •             Annual review of monitoring reported to
  BSC’s QI/UM Committee,

  

 

60

 

	
  QI Standard Per

  BSC

  	
   

  	
  Activities
  Performed

  by Group

  	
   

  	
  Group Reporting

  Frequency to BSC

  	
   

  	
  BSC
  Oversight

  
	
  3.          Health Services
  Contracts

  	
   

  	
  •             Negotiate contracts
  with subcontractors if written
  prior approval obtained from BSC.

  •             Include in contract
  w/subcontracted vendors the requirement that the subcontracted vendor is
  obligated to participate in and be compliant with the BSC QI process and
  findings.

  	
   

  	
   

  	
   

  	
  Prospective review and approval of BSC contract for
  appropriate contract language

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.          Availability of Primary Care Practitioners

  	
   

  	
  •             Access studies

  •             Keep BSC aware of closed PCP
  practices.

  •             Keep BSC aware of changes in status
  of contracted providers.

  	
   

  	
   

  	
   

  	
  •             Review of
  open/closed panels

  •             Monitoring of
  patient geographic access to PCP and specialists offices

  •             Monitoring of
  appropriate referrals to out-of-network providers

  •             Review of patient
  complaint trends re: access and
  availability to care and services.

  •             Review of results
  of access studies

  

 

* Quality Management is not
a delegatable function and therefore not subject to de-delegation.

 

61

 

	
  QI Standard per

  BSC

  	
   

  	
  Activities
  Performed

  by Group

  	
   

  	
  Group

  Reporting

  Frequency to

  BSC

  	
   

  	
  BSC
  Oversight

  
	
  5.          Accessibility
  of Services – BSC is Responsible for Establishing access Guidelines for:

  •             Wait times

  •             Appointments

  •             After-hours care

  •             Telephone access;

  •             Access for
  referrals to specialty care

  •             Development of
  access study design, methodology and
  tools

  	
   

  	
  •             Participate in BSC’s access surveys.

  •             Schedule member appointments based on
  access guidelines.

  •             Perform internal
  IPA/MG access study.

   

  	
   

  	
  •             Quarterly access
  study results as performed by IPA/MG

  	
   

  	
  •             Access Study Data
  results

  •             Review Group’s Access Guidelines

  •             Review of access-related patient
  complaints

  •             Trend reports of member complaints re: access

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.          Member Satisfaction

  	
   

  	
  Participate in Group’s Member Satisfaction Surveys.

   

  	
   

  	
  Quarterly 

  	
   

  	
  •             Review of member
  complaint data.

  •             Review of member
  survey data.

  •             Review of BSC’s
  disenrollment for quality of care issues data.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.          Health Management
  Systems – BSC Designs population -based programs to identify and manage
  chronic conditions of BSC members.

  	
   

  	
  •             Data collection

  •             Program
  Implementation as provided by
  BSC

  •             Provider &
  staff education as provided by BSC

  	
   

  	
  •             Annual submission
  of program design.

  •             Annual submission of BSC member
  participation list.

  	
   

  	
  •             Review by BSC of
  all provider-based chronic care initiatives.

  •             Reconciliation of member
  participation list against BSC list of members assigned to Group with those
  chronic conditions being addressed, to ensure identification of all
  potentially eligible members.

  •             Verification with

  

 

62

 

	
  QI Standard Per

  BSC

  	
   

  	
  Activities
  Performed

  by Group

  	
   

  	
  Group

  Reporting

  Frequency to

  BSC

  	
   

  	
  BSC
  Oversight

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  individual providers of participation in the chronic
  care initiatives.

   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.          Clinical Practice Guidelines — acute and chronic services.

  	
   

  	
  •             Adopts BSC guidelines

  •             Disseminates guidelines to
  providers.

  •             Measures performance against no less than 2 high-volume, high-risk problem-prone guidelines annually.

  •             Submits for review to BSC individually developed guidelines and/or chosen industry established guidelines for review.

  	
   

  	
  •             Annual submission of guidelines.

  •             Submission of results of review of performance measurement against guide-lines to be
  included in the annual report.

  	
   

  	
  •             BSC annual
  assessment to include process of guideline development, performance measurement, and
  distribution.

  •             BSC to review and approve all guidelines.

  

 

* Quality Management is not
a delegatable function and therefore not subject to de-delegation.

 

63

 

	
  QI Standard Per BSC

  	
   

  	
  Activities
  Performed by

  Group

  	
   

  	
  Group Reporting

  Frequency to BSC

  	
   

  	
  BSC
  Oversight

  
	
  9.          Scope and Content of
  non-preventive clinical QI issues: BSC identifies meaningful clinical issues
  for plan-wide monitoring and review.

  	
   

  	
  •             Adopts BSC
  guidelines.

  •             Educates group
  providers in the application and use of the BSC established processes.

  	
   

  	
  •             Annual submission
  of guidelines.

  •             Submission of
  results of review of performance measurement against guide-lines to be
  included in the annual report.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10.    Clinical Measurement
  Activities:

  •             Data collection

  •             Measurement

  •             Data analysis

  •             Intervention &
  Implementation

   

  Related to:

  •             Primary care
  services

  •             High-volume
  specialty services

  •             Behavioral Health
  services

  •             Institutional
  services

  •             Over/under
  utilization monitoring 

  •             Issues that affect
  continuity and coordination of care and service.

  	
   

  	
  •             Identify Group key
  clinical areas for study development

  •             Data collection

  •             Data analysis

  •             Recommend and
  develop interventions

  	
   

  	
  •             Prior to study
  implementation

  •             On-going reports
  during implementation of study

  •             Clinical activity
  findings reported no less than quarterly

  	
   

  	
  •             Prospective review
  and approval of clinical
  measurement activities

  •             Quarterly review of
  monitoring activity results

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  11.    Intervention & follow-up
  for clinical issues

  	
   

  	
  •             Implementation of
  action plan to immediate care and service.

  •             Evaluate affects of

  	
   

  	
  •             Prior to study
  implementation.

  •             On-going reports
  during implementation of 

  	
   

  	
  •             Prospective review
  and approval of clinical measurement activities

  

 

64

 

	
  QI Standard per

  BSC

  	
   

  	
  Activities
  Performed by

  Group

  	
   

  	
  Group

  Reporting

  Frequency to

  BSC

  	
   

  	
  BSC
  Oversight

  
	
   

  	
   

  	
  actions taken.

  	
   

  	
  study.

  •             Clinical activity
  findings reported no less than quarterly

  	
   

  	
  •             Quarterly review of
  monitoring activity results

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  12.    Effectiveness of QI Program
  and Demonstration of Required Improvements

  	
   

  	
  •             Group to
  participate in QI program by submission of required data. Group responsible
  for maintaining separate QI program for group function and issues.

  	
   

  	
  •             Annual QI program
  eval.

  •             QI meeting minutes

  •             QI quarterly
  reporting on activities listed in QI Plan

  	
   

  	
  •             Submission of QI
  annual evaluation.

  

 

* Quality Management is not a delegatable function and therefore not
subject to de-delegation.

 

65

 

	
  QI Standard per

  BSC

  	
   

  	
  Activities
  Performed by

  Group

  	
   

  	
  Group

  Reporting

  Frequency to

  BSC

  	
   

  	
  BSC
  Oversight

  
	
  13.    Grievance process/ Complaint handling &
  reporting

  	
   

  	
  Group
  to coordinate with BSC for communication and management of Grievance and
  Appeals resolution.

  	
   

  	
   

  	
   

  	
  •             Annual review of Group’s complaint policies and procedures

  •             Quarterly review of complaint log

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  14.    QI oversight

  	
   

  	
  Group
  to participate in BSC QI process by implementation, submission and evaluation
  of required audits and provision of data as needed for evaluation of
  processes and function.

  	
   

  	
   

  	
   

  	
  •             Pre-delegation on-site audit

  •             Annual on-site audit

  •             Committee meeting minutes

  •             On-going review of Group delegation
  activities.

  

 

*Quality Management is not a delegatable function and
therefore not subject to de-delegation.

 

66

 

	
  UM Standard per

  BSC

  	
   

  	
  Activities
  Delegated to

  Group

  	
   

  	
  Group Reporting

  Frequency to BSC

  	
   

  	
  BSC
  Oversight

  
	
  1.          UM program
  Structure & Process:

  •             Programs

  •             Work Plan

  •             Annual Eval.

  	
   

  	
  Compose
  written UM Program description Work Plan and Plan Evaluation as outlined in
  BSC Delegation Standards.

  	
   

  	
  Annual

  	
   

  	
  Review
  and submission, annually, of:

  •             UM Program

  •             UM Work plan

  •             UM Annual Eval.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.
  Prior-authorization

  	
   

  	
  Conduct
  prior authorization according to time frames description as outlined in BSC
  Delegation Standards.

  	
   

  	
  Frequency
  of reporting to BSC will be no less than quarterly.

  	
   

  	
  •             Retro-review of referrals

  •             Inter-Rater Reliability Studies

  •             Authorization and Denials

  •             Review trends in QI reporting and patient complaints

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.
  Concurrent review

  	
   

  	
  Conduct
  concurrent review according to time frames description as outlined in BSC
  Delegation Standards.

  	
   

  	
  Frequency
  of reporting to BSC will be no less than quarterly.

  	
   

  	
  •             Retro-review of concurrent review
  decisions

  •             Bed day report

  •             Review trends in QI reporting and
  patient complaints

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.          Case Management – Coordination of care and services
  required to assure appropriate and timely intervention and care for chronic
  conditions, high risk, out of area, out of net-work cases, and difficult
  cases.

  	
   

  	
  Conduct
  case management according to time frames description as outlined in BSC
  Delegation Standards.

  	
   

  	
  Frequency
  of reporting to BSC will be no less than quarterly.

  	
   

  	
  •             Retro-review of case management files

  •             Review trends in QI reporting and patient
  complaints

  

 

67

 

	
  UM Standard per

  BSC

  	
   

  	
  Activities
  Delegated to

  Group

  	
   

  	
  Group Reporting

  Frequency to BSC

  	
   

  	
  BSC
  Oversight

  
	
  5.          Discharge
  Planning

  	
   

  	
  Conduct
  discharge planning according to time description as outlined in BSC
  Delegation Standards.

  	
   

  	
  Frequency
  of reporting to BSC will be no less than quarterly.

  	
   

  	
  •             Retro-review of discharge planning cases

  •             Review trends in QI reporting and patient
  complaints

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.          DME

  	
   

  	
  Conduct
  DME according to time frames description as outlined in BSC Delegation
  Standards.

  	
   

  	
  Frequency
  of reporting to BSC will be no less than quarterly.

  	
   

  	
  •             Retro-review of DME authorization and denials

  •             Review trends in QI reporting and patient
  complaints

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.          Home Health

  	
   

  	
  Conduct
  DME according to time frames description as outlined in BSC Delegation
  Standards.

  	
   

  	
  Frequency
  of reporting to BSC will be no less than quarterly.

  	
   

  	
  •             Retro-review of home health authorization
  and denials

  •             Review trends in QI reporting and patient
  complaints

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.          Institutional Reporting

  	
   

  	
  Conduct
  concurrent review and monitoring for appropriateness and submission of
  reports/encounter data for all admits.

  	
   

  	
  Monthly
  to BSC.

  	
   

  	
  Assure
  institutional report is sent to accountable Health Plan monthly

  

 

68

 

Attachment II to Exhibit F

 

BLUE SHIELD OF CALIFORNIA

UTILIZATION MANAGEMENT (UM) REQUIREMENTS

 

	
  UM Standard per

  BSC

  	
   

  	
  Activities
  Delegated to

  Group

  	
   

  	
  Group Reporting

  Frequency to BSC

  	
   

  	
  BSC
  Oversight

  
	
  9.          Decision Criteria

  •             Medical
  appropriateness

  •             LOS

  •             Catastrophic Case
  Management

  	
   

  	
  •             Development of
  criteria.

  •             Day-to-day
  monitoring of criteria in the in-patient and ambulatory settings.

  	
   

  	
  Frequency of reporting to BSC will be no less than quarterly.

  	
   

  	
  •             Annual review of evidence
  of adoption of criteria

  •             Inter-rater
  reliability study

  •             Bed day report

  •             Catastrophic case
  report

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10.    Standards for UM
  Decision-making

  •             Pre-authorizations

  •             Referrals

  •             Expedited referrals

  •             Denials for medical
  necessity

  •             Retrospective review

  •             Concurrent review

  	
   

  	
  •             Day-to-day
  accounting of In-patient review

  •             Referrals
  management

  •             Medical necessity
  decision-making for patients receiving care in in-patient and ambulatory
  settings within the industry and BSC defined parameters.

  	
   

  	
  Frequency of reporting to BSC will be no less than
  quarterly.

  	
   

  	
  •             Review of denial
  letters for appropriate regulatory language and timeframes

  •             Retro-review of
  authorizations/ referrals/ denials for medical necessity

  •             Bed day report

  •             Inter-rater
  reliability study.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  11.    OOA Patient Management

  	
   

  	
  •             Day-to-day case
  management of out-of-area patients in in-patient and ambulatory settings when
  group is capitated for OOA management with BSC notification; BSC to manage
  when shared savings.

  	
   

  	
  Frequency of reporting to BSC will be concurrent,
  weekly, but in all cases no less than quarterly.

  	
   

  	
  •             Bed day report

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  12.    Technology Assessment

  	
   

  	
  Group is responsible to report and coordinate
  authorization requests for care that is considered experimental and/or
  investigational.

  Group is responsible for the adherence to BSC P&Ps regarding the

  	
   

  	
  Concurrent

  	
   

  	
  •             Review of IPA/MG
  submitted denials for appropriateness and compliance with BSC P&Ps

  •             Review of Appeals
  overturned

  

 

69

 

	
  UM Standard per BSC

  	
   

  	
  Activities
  Delegated to

  Group

  	
   

  	
  Group Reporting

  Frequency to BSC

  	
   

  	
  BSC
  Oversight

  
	
   

  	
   

  	
  authorization
  of new technology and coordination of benefits interpretation.

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  13.    Continuity of Care.

  	
   

  	
  Group
  responsible for the development of P&P and ongoing day-to-day management
  of continuity of care issues as needed and in compliance with current
  regulatory requirements and BSC criteria.

  	
   

  	
   

  	
   

  	
  •             Review and
  approval of submitted P&Ps

  •             Annual review of
  utilization Management minutes of IPA/MG

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  14.    Behavioral Health Management

  	
   

  	
  The
  group is further responsible for the coordination and continuity of care
  related to mental health care issues.

  	
   

  	
   

  	
   

  	
  •             Review and approval
  of submitted
  P&Ps

  •             Annual review of
  Utilization Management minutes of IPA/MG

  •             Medical Records
  review PCPs with >50 members, every other year

  

 

70

 

	
  UM Standard per BSC

  	
   

  	
  Activities
  Delegated to

  Group

  	
   

  	
  Group Reporting

  Frequency to

  BSC

  	
   

  	
  BSC
  Oversight

  
	
  15.    Benefit Development Interpretation

  	
   

  	
  Compliance with benefit interpretation as provided
  by BSC.

  	
   

  	
  Concurrent submission of ALL denials.

  	
   

  	
  Concurrent review of denials.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  16.    Oversight of Delegated UM
  activities

  	
   

  	
  Preparation, maintenance, and availability of all
  documents that demonstrate UM/QM activity in keeping with regulatory
  compliance.

  	
   

  	
  At least quarterly.

  	
   

  	
  Quarterly audits.

  

 

71

 

Attachment III to Exhibit F

 

BLUE
SHIELD OF CALIFORNIA

CREDENTIALING/DELEGATION REQUIREMENTS

 

	
  Standard per BSC

  	
   

  	
  Delegateable

  Status

  	
   

  	
  Activities
  Delegated

  to Group

  	
   

  	
  Group

  Reporting

  Frequency to

  BSC

  	
   

  	
  BSC
  Oversight

  
	
  1.          Credentialing
  structure & process:

  •             Policies &
  procedures

  •             Committee / Review body

  	
   

  	
  Non-delegateable establishment of standards

  	
   

  	
  Development & implementation of relevant
  policies and procedures:

  •             Scope

  •             Criteria

  •             Decision-making

  •             Committee/review
  body

  •             Protection of
  provider rights

  •             Medical Director or
  designee’s responsibilities

  •             Peer
  Review/Disciplinary Action

  •             Documentation of
  Agreement

  •             Initial evaluation

  •             Oversight
  organization retains right of approval/disapproval

  	
   

  	
  Annual

  	
   

  	
  Review of annual submission of:

  •             Policies and
  Procedures

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.          Initial
  credentialing process

  	
   

  	
  Non-delegateable establishment of standards

  	
   

  	
  •             Completion of
  application

  •             Primary source
  verification

  •             Verification of
  information from monitoring organizations

  •             Identification of
  sanction activity

  	
   

  	
  Group submits at least quarterly reports of which
  providers have been appointed or declined for appointment by the Credentials
  Committee

  	
   

  	
  BSC performs at least annual onsite review of a
  sampling of initial credentialing files and committee minutes.

  

 

72

 

	
  Standard per BSC

  	
   

  	
  Delegateable

  Status

  	
   

  	
  Activities
  Delegated

  to Group

  	
   

  	
  Group

  Reporting

  Frequency to

  BSC

  	
   

  	
  BSC
  Oversight

  
	
  3.          Recredentialing
  process

  	
   

  	
  Non-delegateable establishment of standards

  	
   

  	
  •             Primary source
  verification

  •             Review of
  information from monitoring organizations within 180 days of credentialing

  •             PCP Performance
  appraisal which includes: member complaints, QI results, UM reports, and
  member satisfaction (optional)

  •             Recredentialing is
  performed at least every two years.

  	
   

  	
  Group submits at least quarterly reports of which
  providers have been re-appointed or declined for reappointment by the
  Credentials Committee

  	
   

  	
  BSC performs at least annual on-site review of a
  sampling of re-credentialing files and committee minutes.

  

 

73

 

	
  Standard

  per BSC

  	
   

  	
  Delegateable

  Status

  	
   

  	
  Activities

  Delegated to

  Group

  	
   

  	
  Group

  Reporting

  Frequency to

  BSC

  	
   

  	
  BSC
  Oversight

  
	
  4.          Office Site Visits

  	
   

  	
  Non-delegateable establishment of standards

  	
   

  	
  •             Initial office site
  visit for potential PCP’S and OB/Gyn’s which includes evaluation of medical record
  keeping practices

  	
   

  	
  N/A

  	
   

  	
  BSC performs at least annual review of:

  •             Policies &
  procedures describing office site visits Initial credentialing files to
  assess evidence of office site visits

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.          Credentialing
  file maintenance

  	
   

  	
  Non-delegateable establishment of standards

  	
   

  	
  •             Maintenance of
  individual provider credentialing/ recredentialing files.

  •             Submission of copy
  of provider credentialing recredentialing file at the request of BSC

  	
   

  	
  As requested for

  governmental,

  accreditation and

  regulatory review.

  	
   

  	
  BSC performs at least annual review of:

  •             Policies &
  procedures describing submission of files upon request of BSC for the
  purposes of meeting governmental, accrediting and regulatory agency review
  requests. BSC requests for copy of credentialing/ recredentialing file for
  review by governmental, accrediting and regulatory agency review will be
  within the required time frame of requesting agency.

  

 

74

 

Attachment IV to Exhibit F

 

BLUE
SHIELD OF CALIFORNIA

CLAIMS PROCESSING REQUIREMENTS

 

	
  Standard per BSC

  	
   

  	
  Activities
  Delegated to Group

  	
   

  	
  Group Reporting

  Frequency to BSC

  	
   

  	
  BSC
  Oversight

  
	
  1.  Payment

  •             Timeliness

  •             Payment Accuracy

  •             Denials

  	
   

  	
  Payment
  /processing of claims for all services which are the Group’s responsibility
  per this agreement and state or federal regulations.

  	
   

  	
  Monthly

  	
   

  	
  Monthly report review.

  Periodic audits

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.  Claims
  Forwarding

  	
   

  	
  Forwarding
  of claims which are not the group’s payment responsibility within industry
  standard of 8 calendar days.

  	
   

  	
  None

  	
   

  	
  As
  required.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.  Self-Monitoring and Reporting

  	
   

  	
  Internal
  quality assurance testing procedures. Monthly report submission per industry
  standard format.

  	
   

  	
  Monthly

  	
   

  	
  Monthly
  report review.

  Periodic audits.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.  Sub-delegation
  of claims processing through capitation. (This does not refer to a TPA or
  management company arrangement for Group’s entire claims processing.)

  	
   

  	
  Continued
  compliance with all requirements. Monitor sub-delegated claim shops employing
  all means used by Blue Shield or government regulators in their oversight. If
  sub-capitated organization engages a TPA or management company, those must be
  audited by Group.

  	
   

  	
  Monthly
  including breakout of sub-capitated entities.

  	
   

  	
  Periodic
  audits

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.  Audits
  and Audit Preparation and Follow-Up (for CMS, DMHC, BSC)

  	
   

  	
  Preparation
  including producing accurate claims universe lists, providing detailed
  information in a standard questionnaire, selecting and retrieving requested
  documents; claims, back-up records, checks/payment confirmation, and written
  corrective action plans in accordance with BSC instructions.

  	
   

  	
  As
  requested

  	
   

  	
  Periodic
  audits Random focused audits

  Focused reviews

  

 

75

 

Exhibit G-l

 

HMO
IPA/Medical Group Agreement

BLUE SHIELD 65 PLUS PROVISIONS

 

	
  Name of Group:

  	
   

  	
  Prospect
  Health Source Medical Group

  
	
  Effective
  Date:

  	
   

  	
  07/01/2003

  

 

Not Applicable

 

 

76

 

Exhibit G-2

 

HMO
IPA/Medical Group Agreement

BLUE SHIELD POS PROVISIONS

 

	
  Name of Group:

  	
   

  	
  Prospect
  Health Source Medical Group

  
	
  Effective
  Date:

  	
   

  	
  07/01/2003

  

 

This Exhibit implements the
Blue Shield HMO POS Benefit Program (“BSC POS”) pursuant to which BSC POS
Members may receive Covered Services on either an In-Network Services or
Out-of-Network Services basis (as defined below).

 

1.                                       Definitions. In addition to the definitions set forth in the Agreement, the
following definitions apply to this Exhibit G-2:

 

(a)                                  BSC POS Member refers to a Member enrolled in the BSC HMO
POS Benefit Program.

 

(b)                                 In-Network Services refers to Covered Services which are not
Out-of-Network Services.

 

(c)                                  BSC POS Institutional Services are those Covered Services provided to a BSC
POS Member, which are identified in the Division of Financial Responsibility
(Exhibit B.) as Shared Savings (other than Outpatient Prescription Drugs).

 

(d)                                 BSC POS Professional Services are Covered Services provided to a BSC POS
Member which are defined as Capitated Professional Services in Paragraph 1.5 of
the Agreement.

 

(e)                                  Out-of-Network Services refers to Covered Services provided to a BSC
POS Member on the basis of the Member’s self-referral, other than: (i) Services
provided by the Member’s PCP (or physician providing on-call coverage for such
PCP); (ii) Emergency or Urgent Care Services not requiring authorization under
Blue Shield’s utilization management rules; or, (iii) Services not
requiring a PCP referral or authorization from Blue Shield and/or Group or
which Members, in general, have a right to self-refer.

 

2.                                       Financial Responsibility. The Capitation payable to Group pursuant to
Exhibit C shall cover, and Group shall be financially responsible for: (i) all
BSC POS Professional Services which are In-Network Services; and, (ii) all
Out-of-Network BSC POS Professional Services provided by Group Providers.
Except as otherwise provided herein, Blue Shield shall be financially
responsible for Out-of-Network BSC POS Professional Services provided by
providers who are not Group Providers. Those BSC POS Professional Services
which are

 

77

 

Blue
Shield’s financial responsibility hereunder will be included in the POS
Out-of-Network Professional Fund settlement described in Paragraph 8 of this
Exhibit G-2. Those BSC POS Out-of-Network Institutional Service which are the
financial responsibility of Blue Shield, will be included in the POS
Out-of-Network Institutional Fund settlement described in Paragraph 9 of this
Exhibit G-2. Covered BSC POS In-Network Institutional Services which are
identified as Shared Savings Services in Exhibit B will be included in the POS
In-Network Shared Savings Fund settlement described in Paragraph 7 of this
Exhibit G-2. Covered outpatient prescription drug services which are Blue
Shield’s responsibility will be included in the Pharmacy Shared Savings Fund
settlement described in Exhibit D.

 

3.                                       Administrative Services. As set forth in the Provider Manual, Blue
Shield shall advise Group as to which Members are BSC POS Members. In addition:

 

(a)                                  Following Blue Shield’s receipt of a claim
for BSC POS Professional Services, Blue Shield, within such time frames as set
forth in the Provider Manual, shall provide a copy of such claim to Group.
Thereafter, and within such time frames as set forth in the Provider Manual,
Group shall make an initial determination, and so advise Blue Shield in
writing, as to which of such claims are for In-Network Services, which are for
Out-of-Network Services provided by a Group Provider, and which are for
Out-of-Network Services provided by other than a Group Provider.

 

(b)                                 In the event that Group (rather than Blue
Shield) receives a claim for BSC POS Professional Service which it determines
to be for Out-of-Network Services provided by other than a Group Provider,
Group shall, within such time frames as set forth in the Provider Manual,
provide Blue Shield with a copy of the claim and its initial determination.

 

(c)                                  In the event a Group Provider refers a BSC
POS Member for a Covered Service on an In-Network basis, but the Group Provider,
rather than the Member, fails to comply with Group’s utilization management
requirements, such Covered Service shall be deemed an In-Network Service, and
the Member’s financial responsibility shall be limited to the applicable
Copayment for In-Network Services. The Group may refuse to compensate a Group
Provider for such services to the extent permitted in its contract with the
Group Provider providing the service.

 

(d)                                 Blue Shield may, on its own initiative, or in
the event a BSC POS Member or a provider disputes Group’s initial
determinations made pursuant to this Paragraph 3, adjudicate whether a service
was an In-Network or Out-of-Network Service and if an Out-of-Network Service,
whether or not provided by a Group Provider. Blue Shield may also, at its
expense and upon reasonable notice to Group, periodically audit Group’s initial
determinations made pursuant to this Paragraph 3. Group shall cooperate with
such audits and adjudications and provide such information and documentation
regarding its initial determinations as reasonably requested by Blue Shield.
Subject to the Dispute Resolution provisions in this Agreement, Blue Shield’s

 

78

 

determination
shall be binding upon Group. Subject to such dispute resolution procedures: (i)
In the event that Blue Shield determines that it has erroneously paid for
services as Out-of-Network Services from non-Group Providers, which were, in
fact, In-Network Services (or Out-of-Network Services provided by Group Providers),
such amounts shall within ninety (90) days following notice by Blue Shield to
Group of such determination (and the completion of any requested dispute
resolution procedures) be refunded to Blue Shield by Group and Blue Shield may,
in its sole discretion, off-set such amounts from any monies owed to Group by
Blue Shield; and (ii) In the event that Blue Shield determines that Group has
erroneously paid for BSC POS Professional Services as In-Network Services or
Out-of-Network Services provided by Group Providers which were, in fact,
Out-of-Network Services provided by non-Group Providers, Blue Shield shall
within ninety (90) days after such determination, or within ninety (90) days
after such determination is made through the requested dispute resolution
procedures, refund the amounts so paid to Group.

 

(e)                                  Summaries & Settlements: Blue Shield shall provide to Group on a
quarterly basis a summary of the funding and expenses in the Shared Savings
Program.

 

4.                                       Additional Group Payment Responsibility. Notwithstanding any provision of this
Exhibit G-2 to the contrary, Group shall be financially responsible for
Out-of-Network Covered Services provided by Non-Group Providers to the extent
such services were obtained by the BSC POS Member on an Out-of-Network basis as
a direct result of Group’s failure, on an In-Network basis, to timely provide
or arrange for such Covered Services for the BSC POS Member. Such services
shall be excluded from the POS Out-of-Network Fund settlement.

 

5.                                       Group Cooperation with Out-of-Network
Providers. In the event that
a BSC POS Member elects to obtain Out-of-Network Services, Group shall
cooperate with the provider of such Out-of-Network Services to ensure
coordination and continuity of care and, upon request of such provider of Out-of-Network
Services (and with the BSC POS Member’s written authorization), provide copies
of the BSC POS Member’s relevant medical records to such provider.

 

6.                                       Coordination of Benefits for Out-of-Network
Claims. Blue Shield is
solely entitled to collect and retain any and all third party liens,
coordination of benefits, or any other payments obtained from third party
payments for Out-of-Network Services provided to BSC POS Members by non-Group
Providers. Any funds received by Blue Shield for POS Out-of- Network services
shall be credited by Blue Shield in the POS Out-of-Network Fund settlement
described in Paragraph 7 of this Exhibit G-2.

 

7.                                       POS In-Network Shared Savings Fund Settlement. Blue Shield shall establish a POS
In-Network Shared Savings Fund as follows:

 

a.                                       Funding: For BSC POS Members Blue Shield will allocate to a POS In-Network
Shared Savings Fund a per Member per month amount set forth in Schedule 1 to
this Exhibit G-2 for all Members assigned to Group, subject to retroactive
adjustments either upward or downward due to retroactive changes in membership.

 

79

 

b.                                      Charging of Payments: Blue Shield shall charge against the POS In-Network Shared Savings Fund all payments made by Blue Shield
for such BSC POS Members during the annual term of the Agreement for In-Network
services which are designated as Shared Savings Services in Exhibit B, less
payments received by Blue Shield as a result of third-party reimbursement,
Workers’ Compensation recoveries and coordination of benefits payments. Blue
Shield shall include any payments for Shared Savings Services which are paid
prior to the date of the settlement, as well as a reasonable allowance, as
determined by Blue Shield’s actuaries, for incurred but not paid (IBNP) claims.
Any costs for Shared Savings Services not included in any annual settlement
shall be carried forward and included in the Shared Savings settlement for the
succeeding Agreement Year.

 

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

 

d.                                      If the total actual cost of Shared Savings
services is less than the total allocation to the POS In-Network Shared Savings
Fund, then Group shall be entitled to fifty percent (50%) of the amount by
which the allocation exceeds the costs, minus any carry forward resulting from
deficits from previous Agreement years. In no event shall the total amount
payable to Group by Blue Shield pursuant to this Exhibit G-2 exceed fifty percent (50%) of the POS Capitation
Fees paid to IPA during such Agreement Year.

 

e.                                       If the total actual cost of Shared Savings
services is more than the total allocation to the POS In-Network Shared Savings
Fund, then fifty percent (50%) of
the amount by which the actual costs exceed the total allocation shall be
allocated to Group and shall be handled as follows: (i) the excess may be
deducted from any other settlements or payments, except Capitation and
Professional Stop Loss Program payments made pursuant to Exhibit H, due to
Group from Blue Shield, and, (ii) any remaining amounts shall be carried
forward into future Agreement Years and shall be deducted from any Shared
Savings payments to Group in future years. In no event shall the total amount
carried forward pursuant to this Exhibit exceed
fifteen percent (15%) of the POS Capitation Fees paid to IPA during
such Agreement Year.

 

f.                                         Notwithstanding the foregoing or anything to
the contrary herein, any deficit or surplus in the POS IN-Network Shared
Savings Fund shall not be allocated, deducted, or carried forward to any
settlements, payments, or deficits in any Shared Savings Fund for Blue Shield
65 Plus Members.

 

80

 

8.                                       POS Out-of-Network Professional Fund
Settlement. Blue Shield
shall establish a POS Out-of-Network Professional Fund.

 

a.                                       Funding of Out-of-Network Professional Fund - Blue Shield will allocate on a monthly
basis the amounts set forth in Schedule 1 to this Exhibit G-2 for all BSC POS
Members assigned to Group, subject to retroactive adjustments due to
retroactive changes in members (the “POS Out-of-Network Professional Budget”).

 

b.                                      Allocation of POS Out-of-Network Professional
Expenses - The POS
Out-of-Network Professional Fund shall be charged for all Covered
Out-of-Network Professional services which are paid by Blue Shield for BSC POS
Members assigned to Group (the “POS Out-of-Network Professional Expenses”).

 

c.                                       Timing of POS Out-of-Network Professional
Fund Settlement – On an
Agreement year basis, Blue Shield shall perform a reconciliation of the POS
Out-of-Network Professional Fund. Such settlement shall be performed within one
hundred twenty (120) days following the end of the Agreement Year. Any amounts
due from Blue Shield to Group shall be paid within sixty (60) days thereafter.
In the event of termination of the Agreement for any reason, final settlement
of the POS Out-of-Network Professional Fund shall be performed one hundred
fifty (150) days after the date of termination and any amounts due from Blue
Shield to Group shall be paid within thirty (30) days thereafter.

 

d.                                      Out-of-Network Professional Fund Surplus – For any Agreement Year in which the POS
Out-of-Network Professional Budget exceeds the POS Out-of-Network Professional
Expenses, IPA shall be entitled to sixty
percent (60%) of the POS Out-of-Network Professional Fund surplus,
minus any POS Out-of-Network Professional Fund or POS Out-of-Network
Institutional Fund deficit carried forward from a previous Agreement Year. In
no event shall the total aggregate amount payable to Group by Blue Shield
pursuant to this Exhibit G-2 exceed thirty-five
percent (35%) of the POS Capitation Fees paid to Group during such
Agreement Year.

 

e.                                       Out-of-Network Professional Fund Deficit – For any Agreement Year in which the POS
Out-of-Network Professional Expenses exceed the POS Out-of-Network Professional
Budget, Blue Shield shall offset forty
percent (40%) of any out-of-network Professional deficit against any
out-of-network Institutional surplus. Group shall not be obligated to pay to
Blue Shield, from its own funds, all or any portion of Group’s share of the
Deficit. If a deficit results, Blue Shield shall carry such deficit forward
into future Agreement Years and the deficit carryover shall be offset against
any Out-of-Network Professional or Institutional Fund Surpluses in future
years. In the event the Deficit carried forward exceeds the Surplus in a future
year, the remaining deficit shall continue to be carried forward and offset
against any Surpluses in subsequent years. In no event, however, shall the
aggregate total amount carried forward by Blue Shield from the Out-of-Network
POS Professional Services Budget and the Out-of-Network POS Institutional
Services Fund exceed five percent (5%)
of the POS Capitation Fees paid to IPA during such Agreement Year.

 

81

 

9.                                       POS Out-of-Network Institutional Fund
Settlement. Blue Shield
shall establish a POS Out-of-Network Institutional Fund.

 

a.                                       Funding of Out-of-Network Institutional Fund - Blue Shield will allocate on a monthly
basis the amounts set forth in Schedule 1 to this Exhibit G-2 for all BSC POS
Members assigned to Group, subject to retroactive adjustments due to
retroactive changes in members (the “POS Out-of-Network Institutional Budget”).

 

b.                                      Allocation of POS Out-of-Network
Institutional Expenses - The
POS Out-of-Network Institutional Fund shall be charged for all Covered
Out-of-Network Institutional services which are paid by Blue Shield for BSC POS
Members assigned to Group (the “POS Out-of-Network Institutional Expenses”).

 

c.                                       Timing of POS Out-of-Network Institutional
Fund Settlement – On an
Agreement Year basis, Blue Shield shall perform a reconciliation of the POS
Out-of-Network Institutional Fund. Such settlement shall be performed within
one hundred twenty (120) days following the end of the Agreement Year. Any
amounts due from Blue Shield to Group shall be paid within sixty (60) days
thereafter. In the event of termination of the Agreement for any reason, final
settlement of the POS Out-of- Network Institutional Fund shall be performed one
hundred fifty (150) days after the date of termination and any amounts due from
Blue Shield to Group shall be paid within thirty (30) days thereafter.

 

d.                                      Out-of-Network Institutional Fund Surplus - For any Agreement Year in which the POS
Out-of-Network Institutional Budget exceeds the POS Out-of-Network
Institutional Expenses, IPA shall be entitled to sixty percent (60%) of the POS Out-of-Network Institutional
Fund surplus minus any POS Out-of-Network Professional Fund or POS
Out-of-Network Institutional Fund deficit carried forward from a previous
Agreement year. In no event shall the total aggregate amount payable to Group
by Blue Shield pursuant to this Exhibit G-2 exceed thirty-five percent (35%) of the POS Capitation Fees paid to
Group during such Agreement Year.

 

e.                                       Out-of-Network Institutional Fund Deficit – For any Agreement Year in which the POS
Out-of-Network Institutional Expenses exceed the POS Out-of-Network
Institutional Budget, Blue Shield shall offset forty percent (40%) of any out-of-network Institutional
deficit against any out-of-network Professional surplus. Group shall not be
obligated to pay to Blue Shield, from its own funds, all or any portion of
Group’s share of the Deficit. If a deficit results, Blue Shield shall carry
such deficit forward into future Agreement Years and the deficit carryover
shall be offset against any Out-of-Network Professional or Institutional Fund
Surpluses in future years. In the event the Deficit carried forward exceeds the
Surplus in a future year, the remaining deficit shall continue to be carried
forward and offset against any Surpluses in subsequent years. In no event
however, shall the aggregate total amount carried forward by Blue Shield from
the Out-of-Network POS Professional Services Fund and the Out-of-Network POS
Institutional Services Fund exceed five
percent (5%) of the POS Capitation Fees paid to IPA during the
Agreement Year.

 

82

 

Exhibit
G-2, Schedule 1

HMO
IPA/Medical Group Agreement

POS FUND
ALLOCATIONS

Effective
Date: 07/01/2003

 

As of 07/01/2003, the effective net
yield (which includes the deduction for Stop Loss, if applicable) for the
following PMPMs are *** for the POS In-network Shared Saving, *** for POS
Out-of-network Professional, and *** for the POS Out-of-network Institutional,
based on the 02/01/2003 membership.

 

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

 

Members Other Than Blue Shield 65
Plus Members

 

Age & Sex Categories and POS Fund Allocations

 

	
   

  	
   

  	
   

  	
   

  	
  POS Fund Allocation (PMPM)

  	
   

  
	
  Category

  	
   

  	
  IN-NETWORK

  	
   

  	
  OUT-OF-NETWORK

  	
   

  	
  OUT-OF-NETWORK

  	
   

  
	
  Sex

  	
   

  	
  Age

  	
   

  	
  SHARED SAVINGS

  	
   

  	
  PROFESSIONAL

  	
   

  	
  INSTITUTIONAL

  	
   

  
	
  F

  	
   

  	
  0 - 1

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  F

  	
   

  	
  2 - 6

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  F

  	
   

  	
  7 - 18

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  F

  	
   

  	
  19 - 21

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  F

  	
   

  	
  22 - 24

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  F

  	
   

  	
  25 - 29

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  F

  	
   

  	
  30 - 34

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  F

  	
   

  	
  35 - 39

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  F

  	
   

  	
  40 - 44

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  F

  	
   

  	
  45 - 49

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  F

  	
   

  	
  50 - 54

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  F

  	
   

  	
  55 - 59

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  F

  	
   

  	
  60 - 64

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  F

  	
   

  	
  65 + (NM)

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  F

  	
   

  	
  65 + (M)*

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  M

  	
   

  	
  0 - 1

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  M

  	
   

  	
  2 - 6

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  M

  	
   

  	
  7 - 18

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  M

  	
   

  	
  19 - 21

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  M

  	
   

  	
  22 - 24

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  M

  	
   

  	
  25 - 29

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  M

  	
   

  	
  30 - 34

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  M

  	
   

  	
  35 - 39

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  M

  	
   

  	
  40 - 44

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  M

  	
   

  	
  45 - 49

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  M

  	
   

  	
  50 - 54

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  M

  	
   

  	
  55 - 59

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  M

  	
   

  	
  60 - 64

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  M

  	
   

  	
  65 + (NM)

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  M

  	
   

  	
  65 + (M)*

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  

 

* = Medicare Primary

 

*** All references to the POS Fund Allocations have been deleted.

 

83

 

Exhibit
G-2, Schedule 1

HMO
IPA/Medical Group Agreement

POS FUND
ALLOCATIONS

Effective
Date:  07/01/2004

 

As of 07/01/2004, the effective net
yield (which includes the deduction for Stop Loss, if applicable) for the
following PMPMs are ***, for the POS In-network Shared Saving, *** for POS
Out-of-network Professional, and *** for the POS Out-of-network Institutional,
based on the 02/01/2003 membership.

 

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

 

Members Other Than Blue Shield 65
Plus Members

 

Age & Sex Categories and POS Fund Allocations

 

	
  Category

  	
   

  	
  POS Fund Allocation (PMPM)

  	
   

  
	
   

  	
   

  	
  IN-NETWORK

  SHARED SAVINGS

  	
   

  	
  OUT-OF-NETWORK

  PROFESSIONAL

  	
   

  	
  OUT-OF-NETWORK

  INSTITUTIONAL

  	
   

  
	
  Sex

  	
   

  	
  Age

  
	
  F

  	
   

  	
  0 - 1

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  F

  	
   

  	
  2 - 6

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  F

  	
   

  	
  7 - 18

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  F

  	
   

  	
  19 - 21

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  F

  	
   

  	
  22 - 24

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  F

  	
   

  	
  25 - 29

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  F

  	
   

  	
  30 - 34

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  F

  	
   

  	
  35 - 39

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  F

  	
   

  	
  40 - 44

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  F

  	
   

  	
  45 - 49

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  F

  	
   

  	
  50 - 54

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  F

  	
   

  	
  55 - 59

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  F

  	
   

  	
  60 - 64

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  F

  	
   

  	
  65 + (NM)

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  F

  	
   

  	
  65 + (M)*

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  M

  	
   

  	
  0 - 1

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  M

  	
   

  	
  2 - 6

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  M

  	
   

  	
  7 - 18

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  M

  	
   

  	
  19 - 21

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  M

  	
   

  	
  22 - 24

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  M

  	
   

  	
  25 - 29

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  M

  	
   

  	
  30 - 34

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  M

  	
   

  	
  35 - 39

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  M

  	
   

  	
  40 - 44

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  M

  	
   

  	
  45 - 49

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  M

  	
   

  	
  50 - 54

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  M

  	
   

  	
  55 - 59

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  M

  	
   

  	
  60 - 64

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  M

  	
   

  	
  65 + (NM)

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  M

  	
   

  	
  65 + (M)*

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  

 

	
  * = 

  	
  Medicare Primary

  
	
  ***

  	
  All references to the Pros Fund Allocations have
  been deleted.

  

 

84

 

Exhibit H

 

HMO IPA/Medical Group Agreement

PROFESSIONAL STOP LOSS PROGRAM

 

	
  Name of Group:

  	
   

  	
  Prospect
  Health Source Medical Group

  
	
  Effective
  Date:

  	
   

  	
  07/01/2003

  

 

A.                                   Commencement of Stop Loss Program:

 

If,
as set forth on the Signature Page to the Agreement, Group elects to participate
in this Stop Loss Program, this Exhibit H is added to the HMO Medical Agreement
(the “Agreement”) between Group and Blue Shield. The Stop Loss Program set
forth in this Exhibit H commences with respect to Capitated Professional
Services provided to Members on the following date:

 

The
Effective Date of the Agreement

 

OR,

 

[Specify
Date]                                           ,
19  

 

The
commencement date for this Stop Loss Program shall not cause either a
modification of the Agreement Year, as set forth in the Agreement, nor, if the
initial time period covered by the Stop Loss Program is less than a full
Agreement Year, a proration of the Attachment Level set forth below.

 

Notwithstanding
any provision of the Agreement or this Exhibit H to the contrary, Blue Shield
shall have no obligation to permit Group to commence the Stop Loss Program
other than as of the first day of an Agreement Year.

 

B.                                     Termination or Modification of Stop Loss
Program:

 

(1)                                  Group may at anytime, without terminating the
Agreement and by no less than sixty (60) days prior written notice to Blue
Shield, terminate this Stop Loss Program and (delete this Exhibit from the
Agreement), provided that Group provides to Blue Shield, in conjunction with
such termination notice, a certificate of insurance demonstrating that Group
has (or will have as of the effective date of such termination) stop loss
coverage in compliance with Paragraph 7.4 of the Agreement. In the event of
such termination, the Stop Loss Attachment Level described below will not be
prorated.

 

85

 

(2)                                  Blue Shield may, without terminating the
Agreement and by no less than sixty (60) days prior written notice to Group,
terminate this Stop Loss Program as to Group (and delete this Exhibit from the
Agreement) as of midnight of the last day of the Agreement Year.

 

(3)                                  Blue Shield may, by no less than sixty (60)
days prior written notice to Group, modify the provisions of this Stop Loss
Program, including without limitation the Stop Loss Program Charges specified
below. Such modification shall be effective as of the first day of the
Agreement Year which immediately follows the Agreement Year in which such
notice is given.

 

C.                                     Stop Loss Program:

 

(1)                                  For the Stop Loss Program Charges set forth
in Part D below, Blue Shield shall reimburse Group for eighty percent (80%) of
that portion of the Allowable Costs (as described herein) of Capitated
Professional Services provided during any one (1) Agreement Year to any one (1)
Member which exceeds the Attachment Level and which are Group’s financial
responsibility under the Agreement.

 

(2)                                  In addition to the defined terms of the
Agreement, the following terms have the following meanings for this Stop Loss
Program:

 

(i)                                     The Attachment Level is ten thousand
dollars ($10,000) of Allowable Costs incurred by Group for the provision of
Capitated Professional Services to any one (1) Commercial Member (including POS
Members) in any one (1) Agreement Year. The Attachment Level is fifteen
thousand dollars ($15,000) of Allowable Costs incurred by Group for the
provision of Capitated Professional Services to any one (1) Blue Shield 65 Plus
Member in any one (1) Agreement Year.

 

(ii)                                  Allowable Costs (both for determining the Attachment Level
and Stop Loss Program reimbursement after the Attachment Level is reached) are
the lesser of the amount actually paid (other than capitation payments) by
Group for such Capitated Professional Services, or ninety percent (90%) of the
Blue Shield’s PPO Physician Allowances in effect at the time. Allowable Costs
are reduced by: (a) the Member’s applicable Copayments; and (b) any amount for
which Group is entitled to reimbursement or payment from any other source.

 

(3)                                  Group shall submit to Blue Shield any claims
for Stop Loss Program reimbursement within ninety (90) days of the end of the
Agreement Year in which the services, for which Stop Loss Program reimbursement
is claimed, were provided. Blue Shield may deny any claims not submitted within
said time period. Claims shall be in such form, containing such information,
and provided to Blue Shield as set forth in the Provider Manual.

 

86

 

(4)                                  Stop Loss Program reimbursement is provided
only for Capitated Professional Services which are provided to an eligible
Member in conformity with the terms and conditions of the Agreement, including,
without limitation, any provisions requiring Authorizations and case management
program notification and cooperation. Without limiting the foregoing, Stop Loss
Program reimbursement is not paid for any monetary compensation payable to a
Member for any reason, including Group’s negligence in providing or arranging
or failing to provide services.

 

(5)                                  Group shall promptly notify Blue Shield of
all cases for which the Attachment Level is reached or for which it is
reasonably likely that the Attachment Level will be reached.

 

(6)                                  Group shall, as a condition of such Stop Loss
Program reimbursement, provide to Blue Shield all information necessary for
Blue Shield to determine its Stop Loss Program obligation hereunder.

 

(7)                                  Stop Loss Program reimbursement shall be
payable by Blue Shield at the later occurring of: (i) the date of the Shared
Savings Settlement described in Exhibit D to the Agreement; or, (ii)  ninety 
(90) days following the timely, complete, and uncontested submission to
Blue Shield of Group’s Stop Loss Program reimbursement claim.

 

(8)                                  Blue Shield reserves the right to audit
Group’s Stop Loss Program claims and other information provided pursuant to
this Exhibit H.  In the event such audit
determines that there has been an underpayment in Stop Loss Program
reimbursement, Blue Shield shall pay to Group the amount of such underpayment
within forty-five (45) working business days thereafter.  In the event such audit determines that
there has been an overpayment in Stop Loss Program reimbursement, Group shall
pay to Blue Shield the amount of such overpayment within forty-five (45)
working business days thereafter. 
Alternatively, Blue Shield may, at its election, offset such overpayment
from any amount then or thereafter owed by Blue Shield to Group.

 

D.                                    Stop Loss Program Charges to Group:

 

As
reimbursement to Blue Shield for the Stop Loss Program coverage provided
pursuant to this Exhibit, Blue Shield shall deduct from Capitation payable to
Group pursuant to the Agreement, the following per Member per Month (PMPM)
amounts:

 

	
  Commercial

  	
   

  	
  *** PMPM

  
	
  Point of Service (POS)

  	
   

  	
  *** PMPM

  
	
  Blue Shield 65 Plus

  	
   

  	
  *** of Group’s Capitation
  Amount

  

 

87Exhibit 10.172

 

 

 

AMENDMENT
NO. 1

 

The HMO IPA/Medical Group
Shared Savings Provider Agreement between California Physicians’ Service,
d.b.a.  Blue Shield of California
(“BSC-HMO”), and PROSPECT HEALTH SOURCE
MEDICAL GROUP (“Group”), with an effective date of July 1, 2003 is further amended effective July 1, 2003 as follows:

 

Amendment
1

 

Section 2.1l(c) is amended to
read in full as follows:

 

Group acknowledges that a
Member may request transfer between PCPs, and between Blue Shield medical
groups, in accordance with the Member’s applicable Health Services Contract and
Evidence of Coverage.  As appropriate,
Group agrees to accept the transfer of a Blue Shield member to Group at the
request of Blue Shield.  The effective
date of transfer, when requested during the course of treatment, during an
inpatient hospital stay, or during the third trimester of pregnancy, will be
the first of the month following:

 

•             Discharge
from hospital

•             Delivery

•             The
date it is medically appropriate to transfer the member’s care to his/her new
PCP as determined by the Plan.

 

Exceptions must be approved
by the regional Blue Shield Medical Director.

 

Amendment
2

 

Section 3.2(b) is amended to
read in full as follows:

 

(b) In the event of Group’s
continued or repeated failure to compensate Group Providers or other healthcare
providers within the time limits required by this Agreement as set forth in
Section 13.4, Blue Shield may elect to pay claims on behalf of Group and offset
the amount of such payments, along with a monthly administrative fee (not to
exceed 10% of monthly Capitation) from any amounts then or thereafter owed by
Blue Shield to Group, including capitation. 
Prior to any such action, Blue Shield shall have provided Group with
fifteen (15) days’ advance written notice of the repeated failures, which shall
serve as an opportunity to cure the noncompliance.  In the event that payment of such claims is of an urgent or
immediate nature as determined by Blue Shield, Blue Shield may elect to pay
such claims on behalf of Group without advance notice and may offset the amount
of such payments.

 

Amendment
3

 

Section 7.4 is amended to
read in full as follows:

 

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

 

Amendment
4

 

Section 14.10 is amended to
read in full as follows:

 

Non-Solicitation. During the term of this Agreement, and for
one (1) year thereafter, Group shall not solicit, induce, or encourage any
Member to disenroll from Blue Shield or select another health care service plan
for healthcare services.  Additionally,
during the term of this Agreement, and for one (1) year thereafter, Group shall
use best efforts to ensure that Group Providers do not solicit,

 

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

 

1

 

induce, or encourage any Member to disenroll from Blue
Shield or select another health care service plan for healthcare services.  Notwithstanding the foregoing, Group and
Group Providers shall be entitled to freely communicate with Members regarding
any aspect of their health status or treatment.

 

Amendment
5

 

Exhibit F-l, Section 1 is amended to read in full as
follows:

 

Delegation
Responsibilities & Penalties. The capitation amounts paid
to Group by Blue Shield as set forth in Paragraph 7.1 (a) of this Agreement are
based on Blue Shield’s expectation that the Group accepts and will perform
delegation of the requirements set forth as Group’s responsibility in
Attachments I, II, III and IV of this Exhibit F.  The quality improvement and quality management obligations of Blue
Shield are not delegated to Group; however, Group shall have its own fully
functional Quality Management Program, as described in Attachment I, that is
cooperative with and integrated into the Blue Shield Quality Management
Program.  In accordance with paragraph
4.3 (c) of this Agreement, the net monthly capitation penalty reduction for any
de-delegated function shall be as follows:

 

	
   

  	
   

  	
  Commercial

  	
   

  	
  Blue
  Shield 65+

  	
   

  
	
  UM /
  Professional

  	
   

  	
  2.0

  	
  %

  	
  NA

  	
   

  
	
  UM / Shared
  Savings

  	
   

  	
  2.0

  	
  %

  	
  NA

  	
   

  
	
  Credentialing

  	
   

  	
  0.5

  	
  %

  	
  NA

  	
   

  
	
  Claims
  Processing

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Non-contracted
  Only Penalty

  	
   

  	
  0.7

  	
  %

  	
  NA

  	
   

  
	
  All Claims
  Penalty

  	
   

  	
  5.0

  	
  %

  	
  NA

  	
   

  
	
  Non-contracted
  Only Payment Withhold *

  	
   

  	
  8.5

  	
  %

  	
  NA

  	
   

  
	
  All Claims
  Payment Withhold

  	
   

  	
  85.0

  	
  %

  	
  NA

  	
   

  

 

* = Subject to actual
claims paid experience.

 

 

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

 

	
  BLUE
  SHIELD OF CALIFORNIA

  	
  PROSPECT
  HEALTH SOURCE MEDICAL GROUP

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ LISA FARNAN

  	
   

  	
  By:

  	
  /s/ PETER GOLL

  	
   

  
	
   

  	
  LISA FARNAN

  	
   

  	
   

  	
  PETER GOLL

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  SENIOR VICE PRESIDENT,

  	
   

  
	
  Title:

  	
  VICE PRESIDENT, PROVIDER RELATIONS

  	
   

  	
  Title:

  	
  BUSINESS DEVELOPMENT

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Date:

  	
  9-28-03

  	
   

  	
  Date:

  	
  9-17-03

  	
   

  
											

 

2

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00067-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00067-of-00352.parquet"}]]