Document:

Exhibit 10.2

FOURTH
AMENDMENT TO CREDIT AGREEMENT AND THIRD AMENDMENT TO SECURITY AGREEMENT

THIS
FOURTH AMENDMENT TO CREDIT AGREEMENT AND THIRD AMENDMENT TO SECURITY AGREEMENT
(the “Amendment”), dated as of June 30, 2006 is among SPECTRALINK
CORPORATION, a Delaware corporation (the “Borrower”), SPECTRALINK
INTERNATIONAL CORPORATION, the Lenders, and JPMORGAN CHASE BANK, N.A., as the
administrative agent (the “Administrative Agent”).

RECITALS:

A.                                 The Borrower, the Administrative Agent, and
the lenders party thereto entered into that certain Credit Agreement dated as
of December 9, 2005 (as amended by that certain First Amendment to Credit
Agreement dated December 21, 2005 among the Borrower, the Administrative Agent
and the lenders party thereto, that certain Waiver and Second Amendment to
Credit Agreement dated March 28, 2006 among the Borrower, the Administrative
Agent and the lenders party thereto, and that certain Consent and Third
Amendment to Credit Agreement dated May 17, 2006 among the Borrower, the Administrative
Agent and the lenders party thereto, the “Credit Agreement”).

B.                                    In
connection with the Credit Agreement, the Borrower, Spectralink International
Corporation, and the Administrative Agent entered into that certain Security
Agreement dated as of December 9, 2005 (as amended by that certain First
Amendment to Security Agreement dated as of February 15, 2006, among the
Borrower, Spectralink International Corporation, and the Administrative Agent
and that certain Second Amendment to Security Agreement dated as of May 22,
2006 executed by Spectralink International Corporation,  the “Security Agreement”).

C.                                   Contemporaneously with the execution of the
Credit Agreement, the Lenders advanced a $15,000,000 Term Loan to the
Borrower.  By making payments of
$5,000,000 on February 6, 2006, $8,750,000 on March 8, 2006, and $1,250,000 on
March 28, 2006, the Borrower repaid all of the outstanding principal amount of
the Term Loan, and all interest accrued thereon.

D.                                  The Borrower has requested that the Lenders
agree: (i) to reallocate $10,000,000 of the outstanding principal amount of the
Revolving Loans on June 30, 2006 as the “Term Loan” under the Credit Agreement
to be allocated among the Lenders pro rata based their Term Commitments set
forth on Schedule 2.01 to the Credit Agreement; (ii) to deem $10,000,000 of the
outstanding principal amount of the Revolving Loans on June 30, 2006 reduced by
the $10,000,000 being reallocated as a “Term Loan”; and (iii) that such
$10,000,000 “Term Loan” be subject to the terms and provisions of the Credit
Agreement relating to the initial Term Loan advanced under the Credit
Agreement.

NOW,
THEREFORE, in consideration of the premises herein contained and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows effective as of June 30,
2006:

ARTICLE
I.

Definitions

Section 1.1.                                   Definitions.  Capitalized terms used in this
Amendment, to the extent not otherwise defined herein, shall have the same meanings
as in the Credit Agreement, as amended hereby.

 1
 

 

ARTICLE
II.

Amendments
to Credit Agreement

Section 2.1.                                   Amendment to Section 1.01.  The
following definitions contained in Section 1.01 of the Credit Agreement
are amended and restated in their respective entireties to read as follows:

“Term Loan” means (a) a Loan made pursuant to
clause (a) of Section 2.01 and (b) 
$10,000,000 of the outstanding principal amount of the Revolving Loans
on June 30, 2006 which has been reallocated as a “Term Loan” and deemed (i)
advanced by the Lenders on June 30, 2006 in accordance with each Lender’s Term
Loan Commitment set forth on Schedule 2.01 hereto and (ii) used to reduced the
outstanding principal amount of the Revolving Loans on June 30, 2006 in an
aggregate amount equal to $10,000,000.

“Term Loan Maturity Date” means June 30, 2008.

Section 2.2.                                   Amendment to Section 1.01.  The
definition of the term “Excess Cash Flow” contained in Section 1.01 of the
Credit Agreement is deleted in its entirety.

Section 2.3.                                   Amendment to Section 2.10.  Section
2.10 of the Credit Agreement is amended and restated in its entirety to
read as follows:

Section 2.10.                             Amortization of Term Loan.  The
Borrower hereby unconditionally promises to repay the Term Loan in equal
installments of $1,250,000 each, due and payable on the last day of each March,
June, September and December of each year commencing September 30, 2006 and
continuing until and including March 31, 2008. 
Any remaining principal outstanding under the Term Loan shall be due and
payable on the Term Loan Maturity Date. 
Prior to any repayment of any Term Borrowings, the Borrower shall select
the Borrowing or Borrowings to be repaid and shall notify the Administrative
Agent by telephone (confirmed by telecopy) of such selection not later than
11:00 a.m., Houston, Texas time, three Business Days before the scheduled date
of such repayment.  Each repayment of a
Borrowing shall be applied ratably to the Loans included in the repaid
Borrowing.

Section 2.4.                                   Amendment to Section 2.11.  Clause
(d) of Section 2.11 of the Credit Agreement is amended and restated
in its entirety to read as follows:

(d)                                 [Intentionally Omitted.]

Section 2.5.                                   Amendment to Section 5.01(e).  The
two references to “May 30, 2006” contained in Section 5.01(e) of the
Credit Agreement are amended and restated to read “June 30, 2006”.

Section 2.6.                                   Amendment to Schedule 2.01.  Schedule
2.01 of the Credit Agreement is amended to read as Schedule 2.01 hereof.

 2
 

 

ARTICLE
III.

Amendment
to Security Agreement

Section 3.1.                                   Amendment to Section 4.2(a).  Subclause
(ii) of Section 4.2(a) of the Security Agreement is amended and
restated in its entirety to read as follows:

(ii)
                               on or before June 30, 2006, control
agreements covering all of its deposit and security accounts except for account
numbers 258-321542-7, 429-07987, and 429-02013 located at Merrill Lynch,
Pierce, Fenner & Smith Incorporated; provided, that the Debtors shall close
their accounts located at Merrill Lynch, Pierce, Fenner & Smith
Incorporated as soon as possible after June 30, 2006;

ARTICLE
IV.

Conditions
Precedent

Section 4.1.                                   Conditions.  The effectiveness of Articles
II and III of this Amendment is subject to the satisfaction of the
following conditions precedent:

(a)
                               The Administrative Agent shall have received
this Amendment duly executed by the Loan Parties and the Lenders;

(b)                               The Administrative Agent shall have received
evidence, in form and substance reasonably acceptable to the Administrative
Agent, that each Loan Party has notified all of its customers and other Persons
making payment on accounts receivable and other Collateral to make all payments
thereon to a post office box or boxes (i.e.
lock boxes) under the control of Agent;

(c)                                The representations and warranties contained
herein and in all other Loan Documents, as amended hereby, shall be true and
correct in all material respects as of the date hereof as if made on the date
hereof, except for such representations and warranties limited by their terms
to a specific date;

(d)                               No Default shall have occurred and be
continuing; and

(e)                                All documentation and other legal matters
relating to this Amendment shall be satisfactory to the Administrative Agent
and its legal counsel Jenkens & Gilchrist, a Professional Corporation.

ARTICLE
V.

Miscellaneous

Section
5.1.                                   Ratifications.  The
terms and provisions set forth in this Amendment shall modify and supersede all
inconsistent terms and provisions set forth in the Credit Agreement and the
Security Agreement and except as expressly modified and superseded by this
Amendment, the terms and provisions of the Credit Agreement, the Security
Agreement and the other Loan Documents are ratified and confirmed and shall
continue in full force and effect.  The
Loan Parties, the Lenders party hereto, and the Administrative Agent agree that
the Credit Agreement and the Security Agreement as amended hereby and the other
Loan Documents shall continue to be legal, valid, binding and enforceable in
accordance with their respective terms. 
The Loan Parties agree that the Term Loan reallocated from the

 3
 

 

outstanding principal amount
of the Revolving Loans on June 30, 2006 shall be subject to the provisions of
the Term Loan Promissory Notes previously executed by the Borrower payable to
certain of the Lenders.  The parties to
this Amendment agree that the reallocation of the Revolving Loans as a Term
Loan as contemplated by this Amendment shall not constitute a Default under the
Credit Agreement.

Section
5.2.                                   Representations and Warranties.  Each
Loan Party hereby represents and warrants to the Administrative Agent and the
Lenders as follows as of the date hereof and after giving effect to this
Amendment:  (a) no Default exists and (b)
the representations and warranties set forth in the Loan Documents are true and
correct in all material respects on and as of the date hereof with the same
effect as though made on and as of such date except to the extent such
representations and warranties expressly relate to an earlier date, in which
case such representations and warranties shall have been true and correct in
all material respects on and as of such date.

Section
5.3.                                   Survival of Representations and Warranties.  All
representations and warranties made in this Amendment shall survive the
execution and delivery of this Amendment, and no investigation by the
Administrative Agent or any Lender or any closing shall affect the
representations and warranties or the right of the Administrative Agent or any
Lender to rely upon them.

Section
5.4.                                   References to Credit Agreement and Security
Agreement.  Each of the Loan Documents, including the
Credit Agreement and any and all other agreements, documents, or instruments
now or hereafter executed and delivered pursuant to the terms hereof or
pursuant to the terms of the Credit Agreement or the Security Agreement, as
amended hereby, are amended so that any reference in such Loan Documents to the
Credit Agreement or the Security Agreement shall mean a reference to the Credit
Agreement or the Security Agreement, respectively, as amended hereby. Each reference
in the Loan Documents to “Loan Documents” shall include a reference to this
Amendment.

Section
5.5.                                   Expenses of Lender. 
Borrower agrees to pay all costs and expenses incurred by the
Administrative Agent in connection with the preparation, negotiation, and
execution of this Amendment, including without limitation, the costs and fees
of the Administrative Agent’s legal counsel, as and to the extent required by Section
10.03(a) of the Credit Agreement. 
All amounts due under this Section shall be payable not later than three
Business Days after written demand therefor, together with reasonably detailed
supporting documentation.

Section
5.6.                                   Severability.  Any
provision of this Amendment held by a court of competent jurisdiction to be
invalid or unenforceable shall not impair or invalidate the remainder of this
Amendment and the effect thereof shall be confined to the provision so held to
be invalid or unenforceable.

Section
5.7.                                   Applicable Law.  This
Amendment shall be governed by and construed in accordance with the applicable
law pertaining in the State of New York, other than those conflict of law
provisions that would defer to the substantive laws of another
jurisdiction.  This governing law
election has been made by the parties in reliance (at least in part) on Section
5–1401 of the General Obligations Law of the State of New York, as amended (as
and to the extent applicable), and other applicable law.

Section
5.8.                                   Successors and Assigns.  This
Amendment is binding upon and shall inure to the benefit of the Administrative
Agent, each Lender, the Borrower, each Subsidiary Loan Party and their
respective successors and assigns, except that neither Borrower nor any
Subsidiary Loan Party may assign or transfer any of its rights or obligations
hereunder without the prior written consent of each Lender.

Section
5.9.                                   Counterparts.  This
Amendment may be executed in counterparts (and by different parties hereto on
different counterparts), each of which shall constitute an original, but all of
which when taken together shall constitute a single contract.

 4
 

 

Section 5.10.                             Effect of Waiver.  No
consent or waiver, express or implied, by the Administrative Agent or any
Lender to or for any breach of or deviation from any covenant, condition or
duty by any Loan Party shall be deemed a consent or waiver to or of any other
breach of the same or any other covenant, condition or duty.

Section 5.11.                             Headings.  The headings, captions, and
arrangements used in this Amendment are for convenience only and shall not
affect the interpretation of this Amendment.

Section
5.12.                             ENTIRE AGREEMENT.  THIS
AMENDMENT AND THE OTHER LOAN DOCUMENTS EMBODY THE FINAL, ENTIRE AGREEMENT AMONG
THE PARTIES HERETO AND SUPERSEDE ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS,
REPRESENTATIONS AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THIS
AMENDMENT, AND MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF THE PARTIES
HERETO.

Executed as of the date first written above.

	
   

  	
  SPECTRALINK CORPORATION, as
  Borrower

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Ernest J.
  Sampias, Chief Financial Officer,

  
	
   

  	
   

  	
  Executive Vice
  President Finance and

  
	
   

  	
   

  	
  Administration

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  SPECTRALINK
  INTERNATIONAL CORPORATION,

  
	
   

  	
  as a Loan Party

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Leah Maher,
  Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  JPMORGAN CHASE
  BANK, N.A., as the

  
	
   

  	
  Administrative
  Agent and as a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Sean J. Lynch,
  Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  COMERICA WEST
  INCORPORATED

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

 5
 

 

 

	
  

  	
  GUARANTY BANK

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  KEYBANK NATIONAL
  ASSOCIATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  LASALLE BANK
  NATIONAL ASSOCIATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  SILICON VALLEY
  BANK

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  U.S. BANK
  NATIONAL ASSOCIATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

 6

 

SCHEDULE
2.01

TO

FOURTH AMENDMENT TO CREDIT AGREEMENT AND

THIRD AMENDMENT TO SECURITY AGREEMENT

Commitments

	
  Lender

  	
   

  	
  Revolving Commitments

  	
   

  	
  Term Loan

  Commitments

  	
   

  
	
  JPMorgan Chase
  Bank, N.A.

  	
   

  	
  $

  	
  6,250,000

  	
   

  	
  $

  	
  2,500,000.00

  	
   

  
	
  Comerica West
  Incorporated

  	
   

  	
  $

  	
  3,125,000.00

  	
   

  	
  $

  	
  1,250,000.00

  	
   

  
	
  Guaranty Bank

  	
   

  	
  $

  	
  3,125,000.00

  	
   

  	
  $

  	
  1,250,000.00

  	
   

  
	
  KeyBank National
  Association

  	
   

  	
  $

  	
  3,125,000.00

  	
   

  	
  $

  	
  1,250,000.00

  	
   

  
	
  LaSalle Bank
  National Association

  	
   

  	
  $

  	
  3,125,000.00

  	
   

  	
  $

  	
  1,250,000.00

  	
   

  
	
  Silicon Valley
  Bank

  	
   

  	
  $

  	
  3,125,000.00

  	
   

  	
  $

  	
  1,250,000.00

  	
   

  
	
  U.S. Bank
  National Association

  	
   

  	
  $

  	
  3,125,000.00

  	
   

  	
  $

  	
  1,250,000.00

  	
   

  
	
  TOTAL

  	
   

  	
  $

  	
  25,000,000.00

  	
   

  	
  $

  	
  10,000,000.00Exhibit 10.45

 

SPECIALTY
PHARMACY AGREEMENT

 

This Agreement made and
effective March 1, 2006 (the Effective Date”), by and between Blue Cross
Blue Shield of Michigan, a Michigan nonprofit healthcare corporation (“BCBSM”),
whose address is 600 Lafayette East, Detroit, Michigan 48226, Blue Care Network
of Michigan, a Michigan nonprofit corporation and health maintenance
organization, with offices at 20500 Civic Center Drive, Southfield, Ml 48076 (“BCN”),
collectively referred to as “BCBSM and BCN,” and Option Care, Inc. a for
profit corporation with offices at 485 Half Day Road, Suit 300, Buffalo Grove,
IL 60089 (“Provider”).

 

WHEREAS, BCBSM, BCN and Provider recognize as a mutual
objective continuing efforts toward the goal of cost containment and the delivery
of high quality specialty pharmacy mail order services;

 

WHEREAS, Provider is in the business of providing high
quality specialty pharmacy mail order services at discounted prices;

 

WHEREAS, Provider’s specialty pharmacy service program
includes the provision of specialty pharmacy medications, ancillary products
and focused therapy management to individuals and to employees or members of
companies, labor unions, municipalities, associations, and others;

 

WHEREAS, BCBSM and BCN desire to offer such products
and services to their customers;

 

WHEREAS, Provider’s specialty pharmacy service program
includes the provision of specialty pharmacy medications and ancillary products
to health plan physicians;

 

WHEREAS, BCBSM and BCN desire to offer such products to physicians, at a date to
be determined by BCBSM and BCN;

 

WHEREAS, the parties desire to enter into this Agreement;

 

NOW, THEREFORE, in consideration of the mutual covenants
hereinafter set forth, the parties agree as follows:

 

ARTICLE I

DEFINITIONS

 

1.1                                 “Agreement” means this Agreement, as updated
or amended from time to time, and all Addenda attached hereto and made part of
this Agreement by reference.

 

1

 

1.2                                 “Ancillary Products” means products,
equipment and supplies necessary to administer a Specialty Medication (needles,
syringes, alcohol swabs, sharps containers, infusion related supplies, other
medical supplies, etc.).

 

1.3                                 “ASP” means [ * ]

 

1.4                                 “AWP” means [ * ]

 

1.5                                 “BCBSM and BCN Rebates” mean rebates directly
or indirectly attributable to the purchase or utilization of any Covered
Service by a Member.

 

1.6                                 “Brand Drug” means a prescribed drug
designated as brand according to the First Data Bank, or another mutually
agreed upon nationally recognized source, Generic Price Indicator with values
of “0” for non-drug, “2” for prescribed drugs priced as a brand name, “3” for
prescribed drugs that are patent protected and cross licensed products, and “4”
for repackaged products. In addition, as requested by BCBSM and/or BCN and
mutually agreed upon by Option Care, the Provider will provide a claim line
reconciliation and explanation of products that have been modified no more
frequently than once per month.

 

1.7                                 “Certificate” means benefit plan descriptions
under the sponsorship of BCBSM; or certificates and riders issued by BCBSM, BCN
or BCBSM’s sponsorship, or benefits provided pursuant to contracts issued by
other Blue Cross or Blue Shield Plans, administered through reciprocity of
benefit agreements or other Inter-Plan Arrangements. “Certificate” does not
include benefits provided pursuant to automobile no fault or worker’s
compensation insurance coverage.

 

1.8                                 “Cost” means Provider’s acquisition cost as
reflected in Provider’s invoices for Specialty Medications that are Brand Drugs
with new Generic Code Numbers (GCNs).

 

2

 

1.9                                 “Covered Services” means prescription only
Specialty Medications and Ancillary Products listed or provided in Certificates
or other benefit documents.

 

1.10.                        “Exclusive Provider” refers to the Provider’s
selection as the sole specialty pharmacy mail order provider for BCBSM and BCN’s
Specialty Pharmacy program. This term does not mean that BCBSM and BCN, Members
or Physicians must obtain these products and services exclusively from the
Provider.

 

1.11                           “Formulary” means a continually updated list
or lists of prescription medications developed by BCBSM and BCN, which
represent the current clinical judgment of providers and experts in the diagnosis
and treatment of disease.

 

1.12                           “Generic Drug” means a drug designated as
generic according to First Data Bank Generic Price Indicator values, or another
mutually agreed upon nationally recognized source, of “1” - priced as generics.

 

1.13                           “Group” means a corporation, association,
governmental unit, BCBSM subsidiary or other entity or group of individuals who’s
Members are entitled to receive Covered Services.

 

1.14                           “Maximum Allowable Cost” or “MAC” [ * ]

 

1.15                           “Member” means a person entitled by contract
on the date the Covered Service was dispensed, to receive Covered Services.

 

1.16                           “Physician” means a physician licensed to
provide health care services to BCBSM and BCN’s Members or the Members of any
other Blues’ plan.

 

1.17                           “Pharmacist Professional Judgment” means a
determination made by the pharmacist that Covered Services are dispensed in
accordance with all ethical and professional standards prevailing in the
pharmacy community and with Members’ Certificates.

 

1.18                           “Plan Design” means the Covered Services,
exclusions, co-payment, formulary (including formulary drug selection cost
indications, and formulary compliance programs), and other specifications
applicable to each Group.

 

1.19                           “Prescriber” means a health care professional
authorized by law to prescribe Specialty Medications.

 

1.20                           “Program Requirements” mean those criteria
and specifications, established by BCBSM and BCN which are used to determine a
specialty pharmacy’s eligibility

 

3

 

to become and remain a specialty pharmacy participating Provider as set
forth on Addendum C.

 

1.21                           “Provider” means a mail order pharmacy having
in effect a Specialty Pharmacy Agreement.

 

1.22                           “Rebates” mean any and all upfront,
concurrent, or retrospective reimbursement or discount (other than a purchase
price discount) received from a pharmaceutical manufacturer, distributor,
wholesaler, or other entity, including, but not limited to, monetary amounts
associated with (i) formulary, (ii) market share, (iii) utilization,
(iv) clinical allocations, (v) formation and administration of rebate
contracts with pharmaceutical manufacturers, distributors, wholesalers, or other
entities (vi) any other administrative or data fees, (vii) funding
for targeted purposes, and/or (ix) royalties and bonuses.

 

1.23                           “Specialty Medications” means biotech drugs,
including high cost infused medications, oral and self-injectable drugs and
other drugs related to specialty disease categories or other categories, as
agreed upon between BCBSM and BCN and Provider. The term “Specialty Medications”
includes vaccines, but excludes injectable insulin.

 

1.24                           “Specialty Pharmacy” refers to specialized
drug distribution service and focused therapy management conducted with respect
to Specialty Medications and Ancillary Products.

 

ARTICLE II
PROVIDER

RESPONSIBILITIES

 

2.1                                 Compliance With Legal,
Program, and Other Administrative Requirements

 

A.                                   Provider shall comply with all Program
Requirements established by BCBSM and BCN and further agrees that BCBSM and BCN
have sole discretion to amend and modify the Program Requirements from time to
time upon sixty (60) days written notice to Provider. Notice to Provider shall
be provided in accordance with section 3.1 (F).

 

B.                                     Provider shall comply with such other
policies, procedures and administrative requirements (including, without
limitation, Quality Management and Utilization Management Programs) as BCBSM
and BCN may set forth from time to time in administrative manuals or in
other provider communications. Changes to such policies, procedures and
administrative requirements shall be effective with notice.

 

C.                                     Provider shall observe and comply with, and
will require that its employees and subcontractors comply with, all applicable
local, state and federal laws, regulations, ordinances and rules of
professional ethics, that in any manner affect

 

4

 

the conduct of its work, including but not limited to those relating to
the procurement and dispensing of prescription drugs and other pharmaceutical
products, fraud and abuse, discrimination, disabilities, confidentiality
including but not limited to the Health Insurance Portability and
Accountability Act of 1996 and its implementing regulations, and P.A. 350,
self-referral, false claims and prohibition of kickbacks. Provider shall hold
and will require its employees and subcontractors to hold all licenses and/or
permits required by local, state, or federal authorities applicable to
Specialty Pharmacy, including but not limited to those required by Michigan law
(including certain controlled medications) as well as wholesale / distribution
licenses (or registrations) to service BCBSM/BCN Physicians. BCBSM and BCN
require that Provider have and maintain Drug Enforcement Agency (DEA)
registration number(s). Provider shall certify annually in writing, on or
before December 31, to BCBSM and BCN that Provider, its employees and
subcontractors complied with all applicable legal requirements and shall
promptly disclose to BCBSM and BCN in writing any non-compliance for the year
at issue. Provider will submit copies of such documents upon request.

 

D. Provider certifies that Provider and its officers and directors do
not have and will not have, during the term of this Agreement, any felony
convictions.

 

2.2                                 Credentialing Standards

 

A.                                   Provider shall require that: a) All
pharmacists employed or contracted by Provider will maintain a current/valid
State Board of Pharmacy License that contains no restrictions; b) all personnel
employed by, associated or contracted with Provider are licensed or certified
and supervised (when and as required by state law), and qualified by education,
training and experienced to perform their professional duties, c) act
within the scope of their licensure or certification as the case may be;
d) are not on the List Of Excluded Individuals/Entities or List of Debarred
Contractors published by the General Service Administration; e) that all prescription
drugs are dispensed by licensed pharmacists; and f) periodic re- verification
of pharmacist and other licensed personnel (technician, RN, LPN, etc.)
licensure will be maintained by Provider.

 

B.                                     Provider shall maintain a pharmacist to
technician ratio consistent with good pharmacy practice standards as approved by
BCBSM and BCN or as specified by the applicable State Board(s) of Pharmacy.

 

C.                                     Provider shall obtain and maintain
Accreditation in Pharmacy from a nationally recognized accrediting body as
determined by BCBSM and BCN. BCBSM and BCN have determined that accreditation
in specialty pharmacy from ACHC is acceptable accreditation.

 

2.3                                 Insurance - The minimum amount of comprehensive general
liability coverage that Provider shall have and maintain is one million dollars
($1,000,000) per

 

5

 

occurrence and five million dollars ($5,000,000) aggregate. Provider
shall maintain valid professional liability (druggist) and product liability
insurance at a minimum of ($10,000,000) per occurrence. Evidence thereof shall
be furnished to BCBSM and BCN upon request. All insurance shall be held with
carriers having at least an “A” rating and, with respect to comprehensive
general liability coverage, include BCBSM and BCN as additional named insured’s.
If Provider fails to provide coverage in a continuous manner, BCBSM and BCN
will charge back to Provider any expense incurred by BCBSM and BCN, or a
reasonable estimate of the expense, in purchasing like protection, plus the
value of any claims that would not have been paid by BCBSM and BCN had Provider
obtained proper insurance coverage.

 

2.4                                 Notification and Reporting

 

A.                                   Provider shall notify BCBSM and BCN in
writing: 1) immediately upon Provider learning of any circumstances that may have
an adverse impact on the quality of care, or Provider’s ability to provide
Covered Services under this Agreement; 2) immediately upon Provider learning of
any loss or threatened loss of license or accreditation; 3) immediately upon
Provider learning of any proposed acquisition, or sale or other transfer of
Provider’s business, including but not limited to Provider’s mail order
pharmacy, 3) immediately upon Provider learning of any litigation brought
against Provider; 4) immediately upon Provider learning of any actions taken or
investigations initiated by any government agency involving Provider or any
health care entity in which Provider holds more than five percent (5%)
interest; 5) immediately upon Provider learning of any claim relating to fraud,
abuse, self-referral, false claims or kickbacks or any claims involving
Medicare, Medicaid, FEP or other health care programs or insurance carriers.

 

B.                                     Provider shall immediately notify BCBSM and
BCN of any changes in Provider’s business which may have an adverse impact
on the quality of, or Provider’s ability to provide, Covered Services under
this Agreement, including, but not limited to, the transfer of at least half of
the Provider’s pharmacy assets. Prior notification of adverse circumstances or
of changes in Provider’s business does not guarantee continued participation as
a BCBSM/BCN Provider. Business changes include change in ownership, name,
business structure, range of services offered, bankruptcy proceedings or
pharmacy business termination.

 

C.                                     Provider shall, within fifteen (15) days
after receipt of information, notify BCBSM and BCN in writing of any lapse,
restriction, suspension or revocation of Pharmacy’s license, DEA registration
number(s), Medicare or Medicaid participation status; any conviction or
settlement that relates to performance of Covered Services or the provision of
health care; any cancellation of required insurance; placement of Provider or
any employee on the LEIE or GSA exclusion list; and any other matters which
materially affect performance under this

 

6

 

Agreement, including, without limitation, any impairment of pharmacist’s
professional license.

 

2.5                                 Education and Training

 

A.                                   Provider shall provide Members with
customized educational materials explaining the services available through
Provider. Provider shall obtain BCBSM and BCN’s approval prior to distributing
any written materials developed.

 

B.                                     Provider shall provide such sales support and
training as BCBSM and BCN deem appropriate to assist BCBSM and BCN in marketing
and administering the Specialty Pharmacy program.

 

C.                                     Provider shall comply with the training
standards contained in Addendum E and incorporated herein by reference.

 

2.6                                 Customer Service
Requirements

 

A.                                   Provider will provide an experienced and
dedicated account management team.

 

B.                                     Provider will provide a Client Service Team
which will respond to BCBSM and BCN questions, including but not limited to
Members and their concerns, claim payments, and daily interaction between the
parties.

 

C.                                     Provider will establish a customer business
unit (CBU) appropriately staffed to handle the enrolled BCBSM / BCN population.

 

D.                                    Provider shall respond to all inquiries from
Physicians and Members and shall maintain a toll free telephone line

 

E.                                      Provider shall comply with the customer
service requirements and standards contained in Addendum E.

 

F.                                      Provider must demonstrate an ability to
cooperate with BCBSM and BCN, their Members and Groups and Physicians.

 

2.7                                 Operational Service
Requirements and Standards

 

A. Provider shall comply with the operational service requirements and
standards contained in Addendum E.

 

7

 

2.8                                 Contractual Service
Requirements

 

A. Provider shall comply with the contractual service requirements contained
in Addendum E and the requirements contained in the Statement(s) of Work, which
is incorporated herein by reference.

 

2.9                                 Disease Management

 

A.                                   Disease management services are included in
Provider’s service program and shall be provided to BCBSM and BCN.

 

B.                                     The parties’ statement of work shall address
the following, if applicable:

 

1                  A              description of the disease management
program—the disease states/medications covered (as agreed upon by Provider,
BCBSM and/or BCN);

 

2.                                       The objective of the program—the goals, what
will be measured;

 

3.                                       The program specifications—an explanation of
how the program will work. This section shall also specify the party
responsible for any action that needs to be taken as part of the program;

 

4.                                       Program reporting—what will be measured, how
it will be measured, the frequency and timeliness of the reporting;

 

5.                                       Expectations—Group specific expectations of
the results of the program. The templates from the reporting section should
be used to demonstrate expected results based on past history of the client modeled
against the provider’s book of business, with appropriate demographic
weighting;

 

6.                                       Performance guarantees associated with the
program, if applicable; and

 

7.                                       Implementation timeline.

 

C.                                     Provider will educate patients about their
disease state (including long term and short term effects if treated and
untreated) and their medication (including benefits, side effects and drug
interactions);

 

D.                                    Provider will coordinate patient education
and management with BCBSM’s and/or BCN’s Case Management departments.

 

8

 

2.10                           Prior Authorization

 

A.                                   Provider’s service program includes prior
authorization services. If BCBSM and BCN elect to use Provider’s prior
authorization services, Provider shall utilize BCBSM’s and BCN’s existing prior
authorization standards and criteria (the Existing Prior Authorization
Standards). In addition, BCBSM and BCN will work with Provider to develop the
criteria to be applied by Provider in determining whether to designate certain
BCBSM and/or BCN Covered Services as requiring prior approval before dispensing
(“the Prior Authorization List”). BCBSM and BCN will have final approval of the
Prior Authorization List.

 

B.                                     BCBSM and BCN will work with Provider to
develop additional prior authorization criteria and standards to be applied by
Provider to all or select BCBSM and/or BCN Covered Services in determining
whether to grant prior authorization (“the Prior Authorization Standards”). BCBSM
and BCN will have final approval of the Prior Authorization Standards.

 

C.                                     Provider agrees to dispense Covered Services
in accordance with the Prior Authorization List, Existing Prior Authorization
Standards, and additional Prior Authorization Standards, including Provider’s
review of physician supplied documentation, Provider’s follow up with physician
and return of prescriptions to Members with appropriate explanations when prior
authorization for dispensing is denied by Provider. In addition, Provider will
follow up with the physician when a prescription is not legible or complete.

 

D.                                    Provider shall not return unfilled any
prescription to a Member unless Provider provides a written explanation to the
Member stating the reason for the return of the prescription and advises the
Member and the Member’s Physician of the Member’s right to appeal the coverage
denial. The appeal should be directed to BCBSM at the following address:

 

Blue Cross Blue Shield of Michigan

Pharmacy Department 27000 West 11

Mile Mail Code B. 780 Southfield, Ml

48024

 

Or
to BCN at the following address or phone:

 

Provider

Blue Care Network

Appeals/Care Management—Mail Code C336

PO Box 5043

Southfield, Ml 48086-5043

Phone (248) 799-6312

Fax (248) 223-5474

 

9

 

Member

Appeals and Grievance Unit - Mail Code C248

Blue Care Network

P.O. Box 248

Southfield, Ml 48086

Phone 1-800-662-6667

Fax 1-888-458-0716

 

E.                                      BCBSM and BCN will respond to the first and
second level appeals of the coverage denials.

 

F                                         Provider will comply with the BCBSM and BCN member
appeals procedure and abide by decisions reached through that procedure.

 

2.11                           Dispensing and Delivery
Procedures

 

A.                                   Provider agrees to dispense Covered Services
in a manner that conforms to all applicable federal, state and local laws, rules and
regulations including but not limited to those relating to the procurement and
dispensing of prescription drugs and other pharmaceutical products, fraud and
abuse, discrimination, disabilities, confidentiality, self-referral, false
claims and prohibition of kickbacks; with Pharmacist Professional Judgment;
with the ethical standards and standards of professional conduct and practice
prevailing in the pharmacy community; with provider manuals guidelines and
other provider communications, all BCBSM and BCN requirements; and the terms
and conditions of this Agreement.

 

B.                                     Provider shall dispense the quantity of
prescription drugs indicated on the prescription order, up to a maximum of a
ninety (90) day supply per prescription or refill, or as otherwise permitted
under the Member’s Certificate and Program Requirements, subject to the
professional judgment of the dispensing pharmacist, any legal limitations
imposed on the dispensing of controlled substances, and the manufacturer’s recommendations.
Prescription orders may be refilled provided the prescription order so
states. Prescription orders will not be filled (i) more than twelve (12)
months after issuance for non-controlled substances, (ii) more than six (6) months
after issuance for controlled substances or (iii) if prohibited by
applicable law or regulation.

 

C.                                     Provider agrees to provide Covered Services
to Members with the same quality and in the same manner as to Provider’s other
patients and without any prohibited discrimination.

 

10

 

D.                                    Provider will use Pharmacist Professional
Judgment in determining whether drug contra-indications/adverse reactions may exist
and whether the drug therapy prescribed exceeds acceptable norms. In such
situations, Provider must contact the Prescriber to verify the prescription
information prior to dispensing and document the results of the Prescriber
interaction in terms of the necessity and appropriateness for dispensing the
prescription as written. This documentation must be maintained for audit
purposes and shall be provided to BCBSM and BCN upon request.

 

E.                                      Provider shall dispense generic equivalent
prescription drugs unless “Dispense as Written” is required by the physician,
or unless the Member requests brand name prescription drugs. If a Member
requests a brand name prescription drug when a generic drug is available, the
Member will be responsible for paying the difference in cost between the brand
and generic drugs, as well as the Member co-payment and deductible if required by
applicable Plan Design.

 

F.                                      Except as otherwise provided in 2.11 B. and
C, all matters pertaining to the dispensing of prescription drugs or to the
practice of pharmacy in general are subject to the dispensing Pharmacist
Professional Judgment.

 

G.                                     Provider shall supply stamped, preaddressed envelopes
for use by Members in mailing their orders to Provider at Provider’s expense.

 

H.                                    Covered Services will be shipped to Members “signature
required,” at Provider’s expense. In cases when the patient cannot sign for the
package, the courier/carrier may leave the package without receiving a
signature, provided that the patient signs and returns the enclosed delivery
document to Option Care. The package shall be deemed delivered when the
courier/carrier confirms delivery. All prescriptions will be sent in a manner
to assure the integrity of the prescriptions per manufacturer specifications,
including temperature controls.

 

I.                                         Where appropriate, Provider will dispense
Ancillary Products to Members with Specialty Medication orders.

 

J.                                        Provider shall support next-day delivery.

 

K.                                    Provider shall support same-day (stat)
delivery directly (or in partnership with a Michigan based pharmacy).

 

L.                                      Where a Member does not receive an item due
to provider error, including but not limited to Provider’s shipment of the
wrong item, damaged items, or items that are shipped but not received, Provider
shall immediately correct the error via overnight shipping.

 

11

 

M.                                 If Provider makes an error in dispensing a
Covered Service, Provider shall issue a credit to the Member for the amount the
Member was charged for the Covered Service along with a written explanation of
the reason for the credit. If there is no activity on the account for 60 days,
Provider will issue a refund to the Member. Provider will dispense and ship the
correct Covered Service immediately upon notification of the mistake and will
cover the cost of shipping. Provider shall also credit BCBSM/ BCN, as
appropriate, for the error and send written notice to BCBSM identifying the
Member by name and I.D., the Specialty Medication and Ancillary Products at
issue, the error, the cost of the Specialty Medication, the amount of the
credit provided to BCBSM/BCN, and the amount credited/refunded to the Member.
Provider shall provide any additional the information requested by BCBSM and
BCN. Notice shall be sent pursuant to section 15.1.

 

N.                                    Provider will implement appropriate quality
controls to prevent the dispensing of counterfeit prescription drugs and drugs
illegally imported from foreign countries.

 

O.                                    In the event of an over-payment by a Member
or Physician, Provider will issue a credit to the Member or Physician, along
with a written explanation for the reason for the credit. Provider shall apply
credits to open receivables as applicable. If there is no activity on the
Member’s or Physician’s account sixty (60) days after the credit is issued and
no open receivable exists, Provider shall issue a refund to the Member or
Physician in the amount of the overpayment.

 

In the event of an under-payment by a Member or Physician, the Provider
shall nevertheless dispense the drug as indicated and invoice the Member or
Physician for the underpayment.

 

In the event of an overpayment to BCBSM/BCN, Provider shall issue a
credit to BCBSM/BCN. In the event of an underpayment to BCBSM/BCN, Provider
shall issue an invoice in the amount of the underpayment to BCBSM/BCN. In the
event of an overpayment or underpayment to or by BCBSM or BCN, Provider shall
send BCBSM/BCN written notice of such over/under payment along with a written
explanation of how the overpayment/underpayment occurred, the amount of same,
and the amount of over/under payment attributable to individual BCBSM/BCN
members.

 

Provider will reconcile overpayments (i.e. credits), underpayments, and
any amount owing to or by BCBSM and/or BCN due to errors in dispensing,
monthly, on the last day of the month, and will provide a monthly report to
BCBSM and BCN regarding the same. If BCBSM and/or BCN owe Provider additional
funds due to underpayments, Provider will invoice BCBSM and/or BCN and will
explain the reason for the underpayment on the invoice. BCBSM and BCN have the
right to deny recovery of underpayments incorrectly made. If Provider owes

 

12

 

BCBSM and/or BCN money due to overpayments, Provider will issue a check
to BCBSM/BCN with a voucher describing the reason for the check.

 

P. Provider will accept personal checks, cashier checks, money orders
and credit cards as well as other methods of payment for Covered Services. In
the event that Members are not able to afford their lump sum out-of-pocket
expense, Provider may provide payment plans to assist affordability of
care.

 

Q.                                    Delivery is guaranteed by Provider. Provider
will respond promptly to all claims by Members for non-delivery or of delivery
of less than the full amount. In the event of a claim of non-delivery or
delivery of less than the full amount and Provider cannot prove that delivery
occurred, Provider shall immediately replace the order (or the amount shorted)
without charge and shall ship the order via overnight mail.

 

R.                                     Provider will reverse claims for shipments
that are lost or damaged within two weeks of discovery of such loss or damage.
Or, alternatively, Provider shall reship at no additional charge (no bill is
issued). If a claim cannot be reversed or reshipped at no charge, it will be
handled in the same manner as a dispensing error.

 

S.                                      In the event that it becomes impracticable,
for reasons of a force majeure or otherwise, for Provider to dispense Covered
Services to Members, Provider shall notify BCBSM, BCN and use reasonable
efforts to have these items dispensed from an affiliated mail services
pharmacy, subject to BCBSM/BCN approval and applicable laws and regulations.

 

T.                                     Sections 2.11 M, O, Q and R shall survive
termination or expiration of this Agreement.

 

2.12                           Performance Guarantees

 

A.                                   Provider agrees to the performance guarantees
as stated in Addendum F. Failure to meet one or more of the performance
guarantees shall subject provider to the associated penalties. Provider’s
obligations under this section shall survive termination or expiration of
this Agreement.

 

B.            Provider, BCBSM and
BCN may negotiate additional performance guarantees with defined financial
risk as part of the RFP process. In that event, those performance
guarantees and associated penalties will be reflected in a separate document,
signed by the parties and incorporated herein by reference. Provider must meet
the negotiated performance guarantees and will be subject to the financial
penalties for failure to meet the guarantees.

 

13

 

C.                                     Provider shall monitor and track each
performance guarantee on a monthly basis which shall include trend analysis;
provide a written report on each performance guarantee on a calendar quarter
basis within thirty (30) days following the end of each calendar quarter; and
reconcile any penalties on a calendar year basis, any applicable penalties or
other amounts due to be paid out by April 1st following the end
of each calendar year (e.g., any applicable penalties or other amounts due for
performance during 2006 shall be paid by April 1, 2007). During the first
year of the Agreement, Provider shall track performance beginning on the
Effective Date but performance guarantees shall only be evaluated beginning January 1,
2007. Written reports and reconciliations shall be in the form and contain
the information requested by BCBSM and BCN. Provider’s obligations under this section shall
survive termination or expiration of this Agreement.

 

D.                                    Provider shall provide an annual
reconciliation report in the form and containing the content requested by BCBSM
and BCN, by the following April 1st whether or not any penalties or other
amounts are due under the terms of this Agreement. BCBSM and/or BCN reserve the
right to conduct its own verification of any performance analysis or, if no
analysis is provided, of any guarantee, at its expense by utilizing the data
provided by Provider. If such data is insufficient or inaccurate, BCBSM and/or
BCN may, at its sole discretion, designate parties to conduct independent
audits, or utilize other means. Unless otherwise indicated below, Provider
shall monitor, track report and reconcile each performance guarantee separately
for each of BCBSM and BCN. Provider’s obligations under this section shall
survive termination or expiration of this Agreement.

 

E.                                      If BCBSM and BCN receive and validate
complaints from patients, pharmacists, or physicians that Provider has violated
these standards (which complaints have not been accounted for in Provider’s
reports) BCBSM and/or BCN may impose additional penalties consistent with
those penalties referenced in Addendum F.

 

F.                                      BCBSM and BCN may audit Provider at
their convenience and expense to ensure compliance and/or validate compliance
with standards, and may recover amounts owed pursuant to Article VII.
Provider’s obligations under this section shall survive termination or
expiration of this Agreement.

 

2.13                           Claims

 

A.                                   Provider shall establish technical
connections necessary to submit claims using BCBSM’s/BCN’s designated
processors, and Provider agrees to comply with BCBSM’s/BCN’s administrative
requirements governing the use of these systems. Provider shall pay the cost of
all system modifications, line charges

 

14

 

and other communication costs associated with the installation and use
of these systems as well as all fees charged by BCBSM’s/BCN’s claims
processors.

 

B.                                     Provider agrees not to turn off edits at the
facility level and to respond appropriately to on-line messages, including but
not limited to edits that may impact the member’s medical status or
coverage. Provider will provide instruction to the patient on use of
medications, information received in on-line drug messages (e.g., DUR), and in
accordance with state and federal law.

 

C.                                     Provider shall submit claims for Covered Services,
including claims for Covered Services where the co-payment is equal to or
greater than BCBSM/BCN’s reimbursement, and any documentation requested in
relation to such claims.

 

D.                                    Provider will not waive or discount the
applicable co-payment/deductible under any circumstance unless authorized by
BCBSM and BCN.

 

E.                                      For Specialty Medications dispensed to
Members for self-administration, Provider will submit claims on-line utilizing
the most current NCPDP format or other designated form as required by BCBSM
and BCN. For Specialty Medications dispensed to physicians for in-office
administration, Provider will submit claims in electronic format using the
professional 837 HIPAA format, or other designated form as required by
BCBSM and BCN. Provider will be able to accept edits according to the most
current NCPDP Telecommunication Standard for on-line claim submissions.

 

F.                                      Provider will submit claims within 60 days of
date of service; otherwise BCBSM and BCN are under no obligation to pay for
services rendered.

 

G.                                     To be reimbursed, all claims must be complete
and accurate, including without limitation, reporting the National Drug Code
which correctly indicates the package size from which the prescription was
dispensed, the prescription must be signed or called in by the Prescriber and
received by the Member, and no charge for submission may be made to BCBSM,
BCN or the Member.

 

H.                                    BCBSM/BCN will be permitted to deduct
overpayments (whether discovered by Provider or BCBSM/BCN) from future
BCBSM/BCN payments along with an explanation of the credit action taken. In
audit refund recovery situations, where Provider appeals the BCBSM/BCN
determination, BCBSM/BCN will defer deduction of overpayments until the last
unappealed determination. Audit refund recoveries and other overpayment
obligations which cannot be fully repaid over the course of one month, will
bear interest at the BCBSM/BCN prevailing rate, until fully repaid.

 

15

 

I.                                         Provider will reconcile its reimbursements
and appeal any disputed claims within a maximum of 180 days from date payment
is made. All actions to be initiated against BCBSM must be initiated within 180
days from the date payment is made.

 

2.14                           Provider Responsibilities
Related To Payment

 

A.                                   Except in the event that Member has primary
coverage with another carrier or third party payer, where Covered Services are
purchased by a Physician, and except for applicable co-payments or deductibles,
Provider agrees to look solely to BCBSM and BCN for payment for Covered
Services rendered to Members under this Agreement and to accept payment made in
accordance with this Agreement as payment in full. Provider will in no event, including
but not limited to nonpayment by BCBSM and BCN, insolvency or breach of this
Agreement, bill, charge, collect a deposit from, seek payment from, maintain
any action at law or in equity or have any other recourse against a Member or
person (other than BCBSM and BCN) acting on behalf of Member for Covered
Services provided pursuant to this Agreement. This provision does not prohibit
Provider from collecting charges for supplemental benefits or Co- payments or
Deductibles, where appropriate, or for non-Covered Services provided to Members
on a fee-for-service basis. This provision shall survive termination or
expiration of this Agreement for Covered Services rendered to a Member prior to
termination or expiration regardless of the cause giving rise to such
termination or expiration and shall be construed to be for the benefit of the Member.
This provision is not intended to apply to services provided after termination
or expiration of the Agreement. This provision supersedes any oral or written
agreement to the contrary now existing or hereafter entered into between
Provider and Member or person acting on Member’s behalf, insofar as such
contrary agreement relates to liability for payment of Covered Services provided
to a Member under this Agreement.

 

B.                                     Co-payments and Deductibles
Provider shall not bill or
collect from a Member for Covered Services or Non-Reimbursable Covered
Services, except Provider may bill or collect from a Member for any one or
more of the following:

 

1. Provider shall collect from Members payment for
the full amount of any co-payments and deductibles relating to Covered Services
except where the Member share is greater than the cost of the Covered Service,
in which case Provider will credit the Member the difference between the Member’s
share and the cost of the Covered Service provided in Addendum A, or unless
authorized by BCBSM and BCN. However, in no case will a Member be required to
pay any amounts denied or recovered due to overpayment, audit, sanctions or any
other reason as a result of an error by Provider.

 

16

 

C.                                     Nothing in this Agreement shall be construed
to prohibit or otherwise restrict Provider from advising or advocating on behalf
of Member about Member’s health status, medical care, or treatment options; the
risks, benefits and consequences of treatment or non-treatment; or future
treatment decision, regardless of BCBSM or BCN benefit coverage limitations. It
is recognized that Members may consent to receive services that are not
Covered Services or, where authorization is required, have not been authorized
by BCBSM or BCN and therefore may be payable by Member. When Provider is
aware that certain proposed services are not Covered Services or payable by
BCBSM or BCN, Provider must inform Member in advance that such services
are not payable by BCBSM or BCN and must obtain Member’s signed consent to be
billed.

 

D.                                    Provider shall hold BCBSM and BCN harmless
from any responsibility for Member co-payments and deductibles.

 

E.                                      If required by applicable Plan Design,
Provider will collect from all Members the difference in cost between the Brand
Drug and BCBSM’s/BCN’s Multi-source Drug Products List (MAC List) if the Member
refuses substitution of a lower cost generic equivalent drug and the physician
did not require “Dispense as Written.”

 

2.15                           Identification Number - Provider agrees that Provider’s BCBSM and
BCN identification number is the exclusive property of BCBSM and BCN and may not
be sold or transferred.

 

2.16                           Publication - Provider shall permit BCBSM and BCN to
publish Provider’s name and appropriate identifying information in connection
with Provider’s participation in BCBSM’s/BCN’s Specialty Pharmacy program. Providers’
name and identifying information will be and remain its exclusive property.

 

2.17                           Reports - Provider shall compile and send to BCBSM
and BCN such reports as BCBSM and BCN shall from time to time request,
including, but not limited to:

 

A.                                   At least monthly, a comprehensive package of
reports that detail utilization by type (Pharmacy / Medical), Billing report,
detail by prescriber, detail by patient, etc.

 

B.                                     Ad hoc reporting as requested.

 

2.18                           Coordination Of Benefits - Provider shall assist BCBSM and BCN in
coordinating benefits and subrogation rights by obtaining Member’s specific
information regarding third party liability.

 

2.19                           Formulary - Provider shall make reasonable efforts to
educate members and prescribers on the benefits of following BCBSM’s and BCN’s
formulary(s).

 

17

 

2.20                           Cooperation - Provider shall cooperate with all claims
submission requests, pharmacy reviews, quality assurance audits and teams, and
utilization review audits and comply with BCBSM and BCN determinations and
corrective action plans.

 

2.21                           Grace Period - In connection with direct to provider
services, Provider will offer physicians an extended grace period of no less
than [ * ] days before assessing finance charges. However,
if Physician consolidates the Physician’s orders to once [ * ],
Provider shall offer an extended grace period of [ * ] days
to the Physician before assessing finance charges.

 

2.22                           Prompt-Pay Discounts - Provider will offer prompt pay discounts to physicians.

 

ARTICLE III
BCBSM AND BCN

RESPONSIBILITIES

 

3.1 A.                 BCBSM and BCN shall promptly furnish
eligibility data; benefit information, including Covered Services, exclusions,
deductible and co-payment amount, as well as drug risk analysis information,
such as drug to drug interactions, ingredient duplications, therapeutic
duplications, early refills, and disease alerts.

 

B.                                     BCBSM and BCN shall provide provider manuals
and any other communications that affect Provider’s participation in the
Specialty Pharmacy program.

 

C.                                     BCBSM and BCN shall give Provider sixty (60)
days prior written notice of substantial modifications to the Specialty Pharmacy
program in accordance with section 3.1 (F). Other changes will be
effective with notice.

 

D.                                    BCBSM and BCN shall provide a mechanism to
receive input from Provider regarding the Specialty Pharmacy program.

 

E.                                      BCBSM and BCN agree to use their best efforts
to maintain and provide access to benefit and eligibility data for each Member;
provided, however, that the data will be subject to retroactive correction as
necessary and access does not guarantee payment for any Covered Services
dispensed.

 

F.                                      Notice of substantial modifications to this
Agreement required to be provided to Provider by BCBSM and BCN will be provided
in writing, sent by first class mail, postage pre-paid, to the address
stated in Section 15.1

 

3.2                                 Payment to Pro vider

 

A.                                   Covered Services
Provided to Members — BCBSM and BCN’s reimbursement obligation for
Covered Services provided to Members is governed by Addendum A.

 

18

 

B.                                     Covered Services Provided
To Physicians - When BCBSM
and BCN invoke their option to include Covered Services provided to Physicians
in the pricing offered under this Agreement, then at a date to be determined by
BCBSM and BCN, Provider will provide, through mail order, Covered Services, in
such quantities as Physicians may request from time to time, to
Physicians.

 

1.                                       Covered Services Provided
To Physicians And Billed To BCBSM/BCN By Provider. Covered Services provided to Physicians and
billed to BCBSM/BCN by Provider will be reimbursed according to Addendum A.

 

2.                                       Covered Services Provided
And Billed To Physicians. Covered
Services provided and billed to Physicians will be billed to Physicians at the
rates set forth in Addendum A. Provider will look solely to the Physician for
payment for such Covered Services. The remaining terms and conditions of such
orders (including, without limitation, payment and credit) are subject to
negotiation between Provider and Physician.

 

ARTICLE IV
MUTUAL

RESPONSIBILITIES

 

As participating Provider under BCBSM’s and BCN’s Specialty Pharmacy Program,
Provider and BCBSM/BCN will assume the following mutual responsibilities:

 

4.1                                 Independent Contractor - Provider, BCBSM and BCN shall perform as
independent contractors. Nothing in this Agreement shall be construed or be deemed
to create a relationship of employer and employee, or principal and agent, or
any relationship other than that of independent parties contracting with each
other for the sole purpose of carrying out this Agreement.

 

4.2                                 Independent Status. This Agreement is between Provider, BCN and
BCBSM, an independent corporation licensed by the Blue Cross Blue Shield
Association (BCBSA) to use the Blue Cross and Blue Shield names and service
marks in Michigan. However, BCBSM is not the agent of BCBSA and, by accepting
this Agreement, Provider agrees that it made this Agreement based only on what
it was told by BCBSM, BCN or their agents. Only BCN and BCBSM have an obligation
to Provider under this Agreement and no other obligations are created or
implied by this language.

 

19

 

4.3                                 Confidential Information - Provider acknowledges that all information,
written or oral, acquired from BCBSM and BCN is the sole property of BCBSM and
BCN and is considered confidential (Confidential Information). Provider may disclose
this Confidential Information to third parties only with BCBSM’s and BCN’s
written consent. All files or other documents, including but not limited to,
photocopies, microfiche, microfilm and electronic data, supplied to Provider by
BCBSM and BCN will remain BCBSM’s and BCN’s property and will promptly be
returned to BCBSM and BCN at the conclusion of the work. At the conclusion of
the work, Provider will also deliver a written statement that a diligent search
and inquiry has been made for any BCBSM and BCN documents delivered to
contractor during its engagement and that all BCBSM and BCN documents are
returned. Provider has no right to keep or use any BCBSM or BCN documents or information
after the engagement is completed, except to the extent required to document
its compliance with professional work standards.

 

4.4                                 Proprietary Information - BCBSM and BCN have proprietary rights to
various systems and databases and data contained in those systems and
databases, pertaining to its business matters. BCBSM’s and BCN’s proprietary
rights include ownership rights in all claims, Member, provider, and customer
data in all forms, including but not limited to raw data as well as statistical
compilations, both electronic and hard copy; trade secrets; patents;
copyrights; trademarks; algorithms; tables; documentation; processes; and
techniques currently existing or subsequently upgraded or modified (Proprietary
Information). Provider may use BCBSM’s and BCN’s Proprietary Information
during the course of this Agreement only as permitted under this Agreement. Provider
may not keep or use Proprietary Information, including paid claims data,
belonging to a Group shared with BCBSM and BCN for the purpose of having the
Group’s pharmacy benefit administered under this Agreement. Notwithstanding the
foregoing, Provider may use non-BCBSM/BCN or non-patient identifiable data
for statistical compilation purposes. Provider may not use, sell or
disclose this information to any third party without BCBSM’s/BCN’s written consent.
Upon BCBSM’s/BCN’s request, no more than annually, Provider will warrant in
writing its compliance with this provision.

 

4.5                                 Subject to the other terms of this Agreement,
BCBSM and BCN will have the right to access and use and share with BCBSM and
BCN Groups, all Provider data as reasonably necessary to administer the
Agreement.

 

4.6                                 Individually Identifiable
Health Information

 

A. The parties acknowledge that certain member-specific information,
reports and data generated under this Agreement are subject to state and
federal confidentiality laws and regulations. The parties agree to comply in
all material respects with these laws regulations.

 

20

 

B.                                     Provider will maintain as confidential
medical records or any of the information contained therein, as well as
aggregate data that could implicitly identify an individual, to third parties. Provider
will obtain appropriate consent from members for release of medical records or
any information contained therein, to third parties.

 

C.                                     Additional requirements regarding the parties
obligations with respect to the handling of Individually Identifiable Health
Information (IIHI) are set forth in the terms attached and made part of
this Agreement as Addendum B (the Business Associate Addendum).

 

4.7                                 Publication - Neither party may use information
identifying the other party without prior written consent, except as otherwise
provided in this Agreement. Upon termination or expiration of this Agreement,
all use of identifying information will cease.

 

4.8                                 Fraud and Abuse - Provider and BCBSM/BCN shall mutually agree
on actions to be taken to prevent and detect fraud and abuse in the operation
of the Specialty Pharmacy program.

 

ARTICLE V
RECORDKEEPING

AND AUDITS

 

5.1                                 Records

 

A.                                   Provider shall maintain accurate records, in
a current, detailed, organized and comprehensive manner, of all matters
relating to Provider’s obligations under this Agreement. These records must be
kept for seven (7) years from the date of performance of the last Covered
Service, be in writing, comply with applicable state and federal laws,
generally accepted business and customary pharmacy practice, this Agreement,
and be available for examination and audit without charge. Provider’s
obligations under this section shall survive termination or expiration of
this Agreement.

 

5.2                                 Audit

 

A.                                   Provider will permit BCBSM and BCN or, at
BCBSM’s/BCN’s discretion, BCBSM’s and BCN’s duly authorized representatives, to
audit review and duplicate these records and any other records in Provider’s
possession which relate to Provider’s obligations under this Agreement, upon
reasonable notice and during regular business hours.

 

B.                                     Audits include standard BCBSM and BCN review
of Provider’s records relating to Members, facilities and billing of Covered
Services. Provider shall provide BCBSM and BCN with documentation of provider’s
last inspection by its State Board of Pharmacy and all other inspections (e.g.,
flow hood inspection,

 

21

 

etc.). Continued participation may be affected by Provider’s
performance, including quality and utilization reviews conducted under all
BCBSM and BCN programs

 

C.                                     Audits will be conducted pursuant to BCBSM’s
and BCN’s standard business practices. BCBSM and BCN have the right to audit
Provider’s records up to 4 years after termination or expiration of this
Agreement. Once audits are complete, that audit is considered closed and is no
longer eligible for further audits. However, this shall not prevent BCBSM and
BCN or Provider from complying with requests for audit from external sources
(such as customer groups, government agencies, etc.).

 

D.                                    BCBSM/BCN Group Audits. Provider acknowledges
that BCBSM’s/BCN’s groups have the right to audit prescription drug claims.
BCBSM and BCN shall use reasonable efforts to contractually limit the scope of
a BCBSM/BCN Group audit. Upon notice from BCBSM/BCN, Provider will fully
cooperate with any such audit request and shall provide the necessary data and
documents.

 

5.3                                 Access

 

A.                                   In accordance with applicable laws and in
particular HIPAA record access standards, Provider shall provide BCBSM and BCN
representatives’ reasonable access to the pharmacist, the premises, and member
pharmacy records to: inspect equipment and space related to the provision of
Covered Services; to perform utilization and quality management;
facilitate the adjudication of claims; perform peer review activities;
handle member complaints; conduct financial audits; and duplicate records.
Access to the premises is without charge.

 

B.                                     Provider shall make Member records and
related information available as BCBSM and BCN deem necessary to administer
this Agreement. Records must also be promptly available when a member transfers
to another Provider.

 

C.                                     Upon reasonable request by BCBSM and BCN or a
BCN Member’s primary care physician, Provider shall provide copies of the
Member’s pharmacy records and Member encounter data to BCBSM and BCN or the BCN
primary care physician, as applicable, without additional charge.

 

D.                                    Provider agrees to allow the Michigan Office
of Financial and Insurance Services, NCQA or their authorized representatives
to access: (1) Provider’s premises for the purpose of inspecting the
equipment and space used to provide services to Members, (2) the pharmacy
records of those Members as permitted or required under applicable state and
federal law, and (3) financial records as they pertain to prescription
drug coverage.

 

E.                                      This Article shall survive termination
or expiration of this Agreement.

 

22

 

ARTICLE VI

INDEMNIFICATION

 

6.1                                 Provider agrees to defend, indemnify and hold
BCBSM, BCN and their officers, directors, employees, Groups and Members (“BCBSM
and BCN Indemnities”) harmless from and against all claims, liabilities,
damages, causes of action, losses, injury, demands, costs and expenses,
including legal fees, that arise out of or result from, or allege to arise out
of or result from, the acts or omissions of Provider, its officers, directors,
employees, subcontractors, other agents, and/or anyone for whose acts the
Provider, and not BCBSM/BCN, may be liable, including claims by
pharmaceutical manufacturers arising out of, or relating to, or allegedly
arising out of or relating to, Provider’s contracts with such manufacturers.

 

6.2                                 In furtherance of the foregoing indemnity and
not in limitation therefore, Provider agrees that BCBSM and BCN are entitled to
all incidental and consequential damages resulting from a breach of Section 6.1
of this Agreement by Provider, including but not limited to, expenses incurred
to recover from the breach. Vouchers or other evidence showing payment amounts
to be paid to BCBSM and BCN of any loss, damage or expense resulting from
breach of the Agreement shall be conclusive evidence against Provider of the
fact and amount of Provider’s liability.

 

6.3                                 This Article shall survive termination
or expiration of this Agreement.

 

ARTICLE VII
RIGHT

OF RECOVERY

 

7.1                                 BCBSM and BCN reserve the right to and
Provider agrees that BCBSM and BCN may recover for amounts paid for
Covered Services not meeting applicable benefit criteria, Program Requirements,
performance guarantees, legal, contractual, quality management, utilization management
or administrative requirements. BCBSM and BCN may also recover any
overpayments for Covered Services that were incorrectly made, or are: not
verified through Provider’s records; not received by the Member; furnished when
license(s) was lapsed, restricted or revoked, or suspended; or that do not meet
the standards of professional conduct prevailing in community.

 

7.2                                 BCBSM and BCN will not utilize statistical
sampling methodologies to extrapolate refund requests on medical necessity
issues identified through sampling. BCBSM and BCN may extrapolate refund
recoveries from statistically valid samples involving issues other than medical
necessity, including, but not limited to, procedure code billing errors.

 

23

 

7.3                                 BCBSM and BCN may offset any amounts
owed by Provider against any amounts BCBSM and/or BCN owe Provider under any
BCBSM or BCN program.

 

7.4                                 Recovery and offset related to billing code
errors and other business matters confirmed by audit may be based on
statistical sampling methodology.

 

7.5                                 BCBSM and BCN will have the right to initiate
recovery or offset of amounts paid up to [ * ] from the date of
payment; however there is no time limitation on recovery or offset in instances
of fraud and the right to recover or offset shall survive termination or
expiration of this Agreement.

 

ARTICLE VIII

ASSIGNMENT

 

8.1                                 Assignment - Any assignment of this Agreement by either
Party without the prior written consent of the other shall be void, except that
BCBSM and BCN may assign to any affiliate or subsidiary upon notice.

 

8.2                                 Successor In Interest - Provider agrees that upon transfer of at
lease one-half of Provider’s pharmacy business assets, Provider will provide a
signed agreement from the successor stating that successor assumes liability
for any amounts for which Provider may owe but has not paid to BCBSM and
BCN under this Agreement, and upon determination by BCBSM and BCN that
reasonable grounds exist to question pharmacy’s ability to pay any amounts it may owe
under this Agreement, Pharmacy will establish an escrow account or Letter of Credit
in an amount satisfactory to BCBSM and BCN. Such assumption of liability shall
be one of the conditions for BCBSM and BCN approval of any successor in interest
as a participating provider. Such assumption of liability shall not release Provider
from the indebtedness unless an agreement to that effect is entered into between
BCBSM, BCN and Provider.

 

8.3                                 Successor Participation - Upon sale or other transfer of Provider’s
specialty pharmacy business, Provider must inform the successor pharmacy
in writing that there in no guarantee that BCBSM and BCN will accept successor
as a participant under this agreement.

 

ARTICLE IX
AMENDMENT

AND WAIVER

 

This Agreement may be amended by BCBSM and BCN at any time with sixty
(60) days prior written notice for any substantial modifications to Agreement
in accordance with section 3.1 (F), except that BCBSM and BCN may not
amend Addendum A without the written consent of Provider. All other amendments
by BCBSM and BCN shall be effective with thirty (30) days notice to Provider.
This Agreement may also be amended by written agreement executed by the
parties thereto. No waiver of any of the provisions of this Agreement shall be
valid

 

24

 

unless in writing and signed by the appropriate representatives of
BCBSM, BCN and Provider, against whom such a waiver is being sought. No waiver
of one or more of the provisions of this Agreement or failure to enforce the
Agreement by either of the Parties hereto shall be construed as a waiver of any
subsequent breach of the Agreement or any of its provisions.

 

ARTICLE X
TERM, RENEWAL AND

EXPIRATION

 

10.1                           This Agreement shall remain in force for a
Term of three and one half (3 1/2) years from the Effective Date, until September 30,
2009, and shall automatically renew thereafter for one (1) year term
unless written notice is given pursuant to Article XV.

 

10.2                           This Agreement may be terminated by
BCBSM and BCN, without cause, on ninety (90) days written notice to Provider,
which notice shall be provided pursuant to Article XV.

 

10.3                           Provider shall provide prompt written notice
to BCBSM and BCN of any of the following, and BCBSM and BCN may terminate
this Agreement immediately if: 1) Provider’s license, DEA registration or
Medicare or Medicaid participation status is lapsed, restricted, suspended or
revoked or Provider is placed on the List if Excluded Individuals/Entities or
List of Debarred Contractors as published by the General Services
Administration; 2) If any formal action or investigation is initiated by any
government agency involving Provider or any health care entity in which
Provider holds more than 5% interest, or any claim is made against Provider
relating to fraud, abuse, self-referral, false claims, kickbacks, or any claims
involving Medicare, Medicaid, FEP or other health care programs or insurance
carriers; 3) if Provider or any officer/director/owner of Provider pleads guilty
to or is convicted of fraud or a felony relating the provision of health care; 4)
if Provider ceases to offer mail order services; 5) bankruptcy proceedings are initiated
by or against Provider; 6) if Provider’s liability insurance is reduced below
require amounts or terminated or 7) in the event of a Change in Control of Provider.
“Change in Control” shall be defined as (1) consolidation or merger of Provider
with or into any entity, (2) sale, transfer or other disposition of all or
substantially all of the assets of Provider or (3) acquisition by any
entity, or group of entities acting in concert, of beneficial ownership of
twenty (20%) percent or more of the outstanding voting securities of the
Provider.

 

10.4                           This Agreement may be terminated
immediately by BCBSM, BCN or Provider where there is a material breach in the
Agreement by the other Party that remains uncured thirty (30) days after
written notice of the breach specifying the nature of the breach, which notice
is provided pursuant to Article XV.

 

25

 

10.5                           This Agreement may be terminated
immediately by BCBSM and BCN if, during the term of this Agreement BCBSM and/or
BCN lose two (2) or more existing Groups of over 100,000 lives each to an
independent relationship with Provider.

 

10.6                           Upon termination or expiration of this
Agreement, BCBSM and BCN shall be obligated to pay claims to the Provider only
for Covered Services dispensed through the date of termination or expiration.

 

10.7                           The expiration or termination of this
Agreement or any changes as provided in the Agreement shall not terminate or
otherwise limit BCBSM’s and BCN’s right of recovery from Provider as set forth
in Article VII of this Agreement, which right shall survive this
Agreement.

 

10.8                           Obligation to Cooperate. Upon notice of termination of this Agreement,
Provider shall cooperate fully with BCBSM and BCN and comply with BCBSM and BCN
procedures, if any, in the transfer of Members to other Providers.

 

10.9                           Material breach. A material breach of this Agreement includes
but is not limited to: (i) termination of this Agreement by any party for
any reason not permitted in Article X, including termination of this
Agreement by Provider as a result of financial losses or the inability to
satisfy the financial guarantees or (ii) material failure of any party to
comply with the provisions of Article XIV of this Agreement. The Provider
acknowledges and agrees that a material breach described in (i) and (ii) will
cause BCBSM and BCN great economic damage as well as other associated damage,
including loss of reputation and credibility with customers and others. The
parties agree that the precise amount of damages for these non-economic losses
would be difficult or impossible to ascertain. Therefore, the parties agree
that (i) in the case of a material breach based on a wrongful termination
of this Agreement by Provider, Provider will pay BCBSM and BCN liquidated damages
in the amount of [ * ] Dollars to compensate them for non-economic
losses. The parties agree that this liquidated sum is reasonable and is not a
penalty. Payment of liquidated damages under this provision will not prejudice
BCBSM and BCN’s right to pursue other available remedies including recovery of
actual contract damages arising out of the material breach.

 

10.10                     When this Agreement terminates or expires:

 

A.                                   The liability of the parties for obligations
incurred prior to the termination or expiration date will survive termination
or expiration;

 

B.                                     BCBSM and BCN may, at their election, extend
this Agreement for a maximum of six (6) months as necessary for the orderly
transfer of administration;

 

26

 

C. In connection with the transition, upon termination or expiration,
Provider will cooperate by forwarding to the entity or entities designated by
BCBSM and BCN-

 

1)                                      A minimum of twelve (12) months utilization
history;

 

2)                                      Unprocessed Provider and Member submitted
hard copy claims;

 

3)                                      Unfilled mail order prescription and open
refill files;

 

4)                                      Open prior authorizations and support
documentation;

 

5)                                      Any other information the parties mutually
agree is necessary for the transition.

 

ARTICLE XI
DISPUTES

AND APPEALS

 

Disputes arising under this Agreement must first be appealed through
the BCBSM and BCN appeals process. This requires that, within thirty (30) days of
an adverse determination or breach of this Agreement, Provider file a written
response documenting Provider’s position. Within thirty (30) days of receipt of
sufficient documentation, BCBSM and BCN will schedule an informal
conference with the Provider in an effort to resolve the dispute. If the
conference fails to resolve the dispute, Provider may pursue independent
review or remedies.

 

ARTICLE XII
BUSINESS CONTINUITY AND DISASTER

RECOVERY

 

12.1                           Business Continuity Plan. Provider shall institute a business
continuity plan that includes prudent executive succession planning and
executive travel policies consistent with industry standards.

 

12.2                           Disaster Recovery Plan.

 

A.                                   Provider shall maintain and document a
comprehensive Disaster Recovery program for all technical systems (computer,
telephone, fax, etc.).

 

B.                                     Provider’s disaster recovery plan shall
provide for the backup, storage and restoration of data and information used
and generated as a result of this Agreement.

 

C.                                     Provider’s disaster recovery plan shall
enable Provider to perform its duties, obligations and services under this
Agreement within forth-eight (48) hours of a disaster.

 

27

 

D.                                    Disaster means any occurrence, natural or
otherwise, that materially affects Provider’s ability to perform its duties
and obligations under this Agreement.

 

E.                                      Provider’s disaster recovery plan shall
comply with HIPAA regulations and good business practices.

 

ARTICLE XIII

SERVICE
MARKS

 

13.1                           It is understood by the parties that the Blue
Cross and Blue Shield Trademarks (the Blue Cross and Blue Shield names and
symbols) are owned by the Blue Cross and Blue Shield Association and licensed
by the Association to Local Blue Cross and/or Blue Shield Plans and their
affiliates for their respective licensed geographical areas. Accordingly,
Provider will not obtain under this Agreement any rights to these Marks and
will not conduct any activity or make any statement, written or oral, that may constitute
an infringement upon the use of these marks by the Blue Cross and Blue Shield
Association or any licensed Blue Cross and/or Blue Shield plan. Provider will
indemnify and hold harmless BCBSA and any licensed Plan against any action,
claim or loss arising from any infringement by Provider including all costs and
reasonable attorneys’ fees.

 

13.2                           It is also understood by the parties that any
trademarks owned by either party are its exclusive property and may only
be used as permitted by or licensed by it. Accordingly, no party will obtain
any rights to the other’s marks and will not conduct any activity or make any
statement, written or oral, which in any manner may constitute an
infringement upon the other party’s use of its marks. Each party will hold
harmless and indemnify the other against any action, claim or loss arising from
any infringement of its marks, including all costs and reasonable attorneys’
fees.

 

13.3                           This Article survives termination or
expiration of this Agreement.

 

ARTICLE XIV

MARKETING
PROTOCOL

 

14.1                           Each party to this Agreement has considerable
complementary expertise in various aspects of the marketing and provision of
Specialty Pharmacy services. The parties shall coordinate their efforts in a
teaming arrangement to more effectively and efficiently promote their
respective services to existing and potential BCBSM and BCN customers by
establishing the following marketing arrangement. Any limitations are based on
the fact that BCBSM, BCN and Provider have shared and will be sharing
confidential information with respect to certain groups such as utilization
data or prescribing patterns of physicians within BCBSM’s and BCN’s service
area, which would provide Provider with a

 

28

 

competitive advantage in submitting an independent competing bid for
any BCBSM and BCN group or potential group.

 

14.2                           BCBSM and BCN shall have the sole
responsibility for marketing specialty pharmacy drug plans to Michigan
headquartered groups. However, the provisions of this Article do not apply
to any federal government group plan; to any group that is headquartered
outside the State of Michigan but has a division, subsidiary or affiliate
located in the State of Michigan; or third party administrators, health plan
carriers (e.g. health maintenance organizations, preferred provider
organizations etc.) or other insurance companies.

 

14.3                           In recognition of this teaming arrangement,
with respect to existing and potential groups, BCBSM, BCN and Provider shall
coordinate with and convey to them the specialty pharmacy program offered by
them as a team under this Agreement. However, the parties recognize that from
time to time a potential group may directly approach a party to obtain a
separate bid or to otherwise discuss establishing an independent relationship
with such party relative to one or more of the services that are intended to be
jointly offered by the parties under this Agreement. Under such circumstances,
the party that is approached by the potential group shall immediately notify
the other party that it has been contacted and shall advise the potential group
that a teaming arrangement is place which requires the parties to submit a
joint response to the bid for the services that are contemplated by this
Agreement.

 

The party shall also describe to the potential group the value of the
teaming arrangement and request that the potential group allow a joint response
to the bid. If the potential group declines the request for a joint response to
the bid and instead insists on receiving a separate bid or having independent
discussions with a party, then before such bid or discussions may occur,
the party will notify the other party that it believes it has fulfilled the
requirements of this paragraph and intends to proceed with a separate bid or
discussions. The party not bidding or having such discussions may nevertheless
have contacts with a potential group that is otherwise permissible.
Furthermore, following the Group’s decision, the parties will discuss the
circumstances surrounding the decision; the parties shall discuss the
circumstances surrounding the decision and devise ways to strengthen their
teaming arrangement.

 

14.4                           This Section shall not apply if a
potential group (a) expressly excludes a party from bidding on its
business after being notified of the relationship between the parties; (b) requests
separate bids from any of the parties; or (c) specifies that it no longer
desires to have its specialty pharmacy drug program administered by the parties
pursuant to the terms of this Agreement; or d) is an existing Provider account
that includes retail prescription drug services. In such cases, the parties may separately
market their services to the group. However, based on the substantial volume of
BCBSM’s and BCN’s business and the resulting increased efficiencies and
financial benefits that accrue to all parties, during the term of this

 

29

 

Agreement, Provider agrees that the pricing in Addendum A shall be no
less favorable than the pricing Provider offers to any third party for
comparable volume, services and prescription drug plans. Upon BCBSM’s or BCN’s
request, Provider shall warrant that it has complied with this Section.

 

14.5                           The provisions of this Article will not
prohibit Provider from providing similar specialty pharmacy services to other
Blue Cross Blue Shield Plans, carriers, HMO’s, third party administrators, or
other similar entities (whether or not these entities are competitors of BCBSM
and/or BCN). BCBSM and BCN reserve no rights with respect to Provider’s other
business, except to the extent that any activity may be reasonably
construed as in conflict with BCBSM’s and BCN’s rights as set forth herein. In
case of such conflict, provider shall not provide such other services. Financial
interest in a competing organization consisting of ownership of publicly traded
securities is not considered a conflict of interest for the purposes of this
paragraph.

 

14.6                           During the term of this Agreement and for one
year after, Provider agrees that no Provider personnel working on BCBSM and BCN
business will have any financial interest in any person or organization that
competes with BCBSM without BCBSM’s prior written consent. This provision does
not require disclosure if the financial interest in a competing organization
consists of ownership of publicly traded securities.

 

14.7                           This Article will not prevent BCBSM and
BCN from entering into other marketing arrangements with other
providers/vendors or PBM’s relating to specialty, retail or mail order pharmacy
business.

 

14.8                           This Article will not prevent BCBSM and
BCN from contracting with other providers/vendors or PBM’s with respect to
specialty, retail or mail order pharmacy business.

 

ARTICLE XV

MISCELLANEOUS

 

15.1                           Notices - Unless otherwise permitted by the
Agreement, all notices required under this Agreement shall be in writing and
sent by First Class mail, postage paid, addressed as follows:

 

If to BCBSM:

 

Blue Cross Blue Shield of Michigan

C/o Pharmacy Services

MC B774

27000 W. 11 Mile Road.

Southfield Michigan 48034

Attention: Director Pharmacy Services

 

30

 

If to BCN:

 

Blue Care Network of Michigan C/o Pharmacy Services MC C303

20500 Civic Center Drive Southfield, Ml 48076 Attention: Director of Pharmacy

 

If Care Management for BCN

Blue Care Network of Michigan

C/o Pharmacy Services

MC C336

20500 Civic Center Drive

Southfield, Ml 48076

Attention: Director of Care Management

 

If Provider Appeals to BCN:

Provider

Blue Care Network of Michigan

Appeals/Care Management - MC C336

P.O. Box 5043

Southfield, Ml 48086-5043

Phone (248) 799-6312

Fax (248) 223-5474

 

If Member Appeals to BCN:

Member

Blue Care Network of Michigan

Appeals and Grievance Unit- MC C248

P.O. Box 248

Southfield, Ml 48086-5043

Phone 1-800-662-6667

Fax 1-800-458-0716

 

 

If to Provider:

Corporate

Option Care, Inc.

Attn: General Counsel

485 Half Day Road

Suite 300

Buffalo Grove, IL 60089

 

Copy to:

Corporate

Option Care, Inc.

Attn: CEO

485 Half Day Road

Suite 300

Buffalo Grove, IL 60089

 

31

 

Copy
to:

 

Option
Care, Inc.

Attn:
EVP of Specialty Operations

1350
Highland Dr.

Suite
D

Ann
Arbor, Ml 48108

 

15.2                           Governing Law and Venue - This Agreement shall be construed and
governed in accordance with the laws of the State of Michigan, without regard
to any conflicts of law principles applied in that State. Any suit or
proceeding relating to this Agreement shall be brought only in Oakland County,
Michigan. Each party consents to the exclusive personal jurisdiction and venue
of the courts, state and federal, located in Oakland County, Michigan. Provider
will, nevertheless, comply with all applicable laws and regulations governing
its operations, including but not limited to Michigan law and the law in the
State in which Provider’s specialty pharmacy is located.

 

15.3                           Enforceability - The invalidity or unenforceability of any
of the terms or provisions hereof shall not affect the validity or
enforceability of any other term or provision.

 

15.4                           Section Headings - Section headings are inserted for convenience
only and shall not be used in any way to construe the terms of this Agreement.

 

15.5                           Entire Agreement - This Agreement, together with the Addenda
hereto, embodies the entire understanding of the parties in relation to the
subject matter hereof, superseding any prior agreements, understandings or
negotiations, whether written or oral, and shall be binding upon their
successors and assigns.

 

15.6                           Illegal Provisions - If a court determines that any provision of
this Agreement is illegal, the remainder of the Agreement will remain in full
force.

 

15.7                           Subcontract/Delegation  — Provider may not delegate or subcontract this Agreement without the
prior written consent of BCBSM and BCN and the express consent of the assignee
to be bound by all of the terms and conditions of the Agreement. If BCBSM and
BCN consent and Provider subcontracts or delegates any responsibilities under
this Agreement, such responsibilities must

 

32

 

be
performed under Provider’s guidance and Provider remains fully responsible for
the performance of such responsibilities.

 

15.8                           Outsourcing - Provider may not outsource any work under
outside the United States this Agreement without the written consent of BCBSM
and BCN.

 

15.9                           Exclusive Provider - Provider is the sole Specialty Pharmacy mail
order provider for BCBSM’s and BCN’s Specialty Pharmacy program. This does not
mean, however, that BCBSM and BCN must obtain Specialty Pharmacy exclusively from
Provider.

 

15.10                     Preferred Customer Status - Provider will treat BCBSM and BCN as a
preferred customer to any BCBSM/BCN requests for enhancements or product
changes.

 

15.11                     Conflicts of Interest - Provider will, at all times, act in, and
protect BCBSM’s and BCN’s, their Groups’ and Members’ best interests when
providing services under this Agreement. Provider will not engage in any
activity that could be reasonably perceived as being directly or indirectly as
in conflict with its obligations to BCBSM, BCN, their Groups or members.

 

15.12                     Non-discrimination - Pharmacy shall provide Covered Services to
Members without regard to health status or health care needs of such Members. Pharmacy
shall not differentiate or discriminate in the provision of Covered Services to
Members on the basis of race, gender, creed, ancestry, lawful occupation, age,
religion, marital status, sexual orientation, mental or physical disability
color, national origin, place of residence, health status, source of payment
for services, cost or extent of Covered Services required, status as Members,
or any other grounds prohibited by law or this Agreement. Pharmacy shall
provide Covered Services to Members: (a) in no less than the same manner and in
accordance with at least the same standards as offered to Provider’s patients
who are not Members; and (b) in accordance with at least the same standard of
practice, care, skill and diligence customarily used by similarly situated
pharmacies at the time at which such services are rendered.

 

15.13                     No Third Party Rights - This Agreement is intended solely for the
benefit of the parties hereto and there is no intention, express or otherwise,
to create rights or interests for any party or persons other than BCBSM, BCN
and Provider. This Agreement shall be enforceable only by the parties hereto and
no other person shall have the right to enforcement of the provisions contained
herein, including, without limitation, any BCBSM/BCN customer, member or any
other individual.

 

15.14                     Advertisement - Provider will not, in any manner advertise or
publish the fact that it has furnished, or contracted to furnish, services to
BCBSM or BCN without BCBSM’s and BCN’s prior written consent.

 

33

 

15.15                     Changes In Corporate Status
- Subject to applicable law,
Provider will provide BCBSM and BCN advance written notice of any changes or
projected changes in its corporate status, including changes in existing
shareholders, mergers, consolidations, and sale of all or substantially all of
its assets. Provider will provide at least five months’ notice of such changes.

 

15.16                     Contact with Groups - The parties will agree on how contacts with
groups will be handled. In general, however, Provider will not initiate
communication with any BCBSM or BCN Group without the prior written consent of
BCBSM’s and BCN’s Director of Pharmacy Services Administration. Once consent is
given, BCBSM and BCN will be afforded the opportunity to participate in all
contacts between Provider and Group.

 

15.17                     Force Majeure - Subject to Section 2.11(s), none of the
parties will be liable, in any manner, for failure to meet its obligations
under this Agreement if that failure is directly or indirectly caused by
matters which are beyond the party’s reasonable control, including any delay or
failure due to strikes or labor disputes; earthquakes, storms, floods or other
extreme weather or acts of God; riots, fires, explosions, embargoes, war or
other outbreak of hostilities; delay of carriers, suppliers or
telecommunication providers; or government acts or regulations, including any
change in law. “Law” means any federal, state, or local constitution, charter,
act, statute, law, ordinance, code, rule, regulation, or order, or any other
binding legislative, executive, judicial or administrative action.

 

15.18                     Signature - Signature on this page binds the parties to
the entire Agreement as defined in Article I, and warrants that signatory is
authorized to sign this Agreement.

 

IN WITNESS WHEREOF, and intending to be
legally bound, the parties have executed this Agreement on the date set forth
below:

 

	
  PROVIDER

  	
   

  	
  BLUE CROSS BLUE SHIELD

  
	
   

  	
   

  	
  OF MICHIGAN

  
	
   

  	
   

  	
   

  
	
  BY:

  	
   

  	
   

  	
  BY:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  TITLE:

  	
   

  	
   

  	
  TITLE:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  DATE:

  	
   

  	
   

  	
  DATE:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  BLUE CARE NETWORK

  	
   

  	
  BLUE CROSS BLUE SHIELD

  
	
  OF MICHIGAN

  	
   

  	
  OF MICHIGAN

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  BY:

  	
   

  	
   

  	
  BY:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  TITLE:

  	
   

  	
   

  	
  TITLE:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  DATE:

  	
   

  	
   

  	
  DATE:

  	
   

  

 

 

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ADDENDUM A

 

SPECIALTY PHARMACY PROGRAM

REIMBURSEMENT/RATES

 

A.
Covered Services Provided To Members. Under the Specialty Pharmacy
program, reimbursement for Covered Services provided to Members will be based
on the following formula: Drug Product Cost minus Member co-payment and
deductible equals the reimbursement to Provider.

 

Drug
Product Cost

 

1.             Price List. Reimbursement
for Specialty Medications listed on Addendum A-1 (the Price List) is [ * ]
as described in the Provider’s
response to the RFP and mutually agreed upon by the parties in writing
(Addendum A-1*).

 

2.             Generics Drugs not on the Price
List.

 

A.            Reimbursement for
Specialty Medications is [ * ]  for drugs: 1) approved as Generic Drugs
beginning when the drug comes to market as a [ * ]and ending when the drug is placed on the
[ * ] list; or 2) the drug is not referenced on the Price List and is placed
on the [ * ] list.

 

B.            When the drug is
placed on the [ * ]  list, the [ * ]list price applies.

 

C.            Immediately upon the
drug being placed on the [ * ]  list the parties agree to negotiate an [ * ] within
60 days (or until such agreement is reached) for the Specialty Medication for
placement on the Price List. Such negotiated price will replace the [ * ] at that
time. The target reference for the [ * ] will be the [ * ].

 

D.            Dispense As Written
(DAW) requests will be processed and paid according the Member’s Plan Design.

 

3.             New Brand Drugs. Reimbursement
for Specialty Medications that are Brand Drugs with new GCNs is [ * ]. Within sixty (60) days of introduction of the product
and the [ * ]  is established (or as soon as an agreement
can be reached), the parties will negotiate an [ * ]for the Specialty Medication for
placement on the Price List.

 

*Addendum A-1 lists the [ * ]
for Specialty Medications by
NDC. In the event that an NDC becomes obsolete, Provider shall use the
replacement NDC upon the date that the previous NDC becomes obsolete as
indicated by First Data Bank, the FDA or any other mutually agreed upon source.
Provider shall immediately

 

35

 

notify BCBSM and BCN of the
new NDC. The [ * ]  on the obsolete NDC will apply to any
replacement NDC.

 

Member
Co-payment

 

The
co-payment level for Members under the Specialty Pharmacy program will be
determined by each Group (or in the case of individual coverage, individual)
purchasing the Specialty Medication under this Agreement and will vary per
Group (or individual in the case of individual coverage).

 

Deductible

 

The
deductible for Members under the Specialty Pharmacy program will be determined
by each Group (or individual in the case of individual coverage) purchasing the
Specialty Medication under this Agreement and will vary per Group (or
individual in the case of individual coverage).

 

Dispensing
Fee

 

[ * ]

 

Pharmacy
Incentive

 

[ * ]

 

Ancillary Products

 

Provider
shall dispense Ancillary Products to Members with Specialty Medications. The
Drug Product Cost includes the cost of Ancillary Products. BCBSM and BCN will
not provide additional reimbursement to Provider for Ancillary Product costs.

 

Programs
and Services

 

The
Drug Product Cost includes the costs of all programs and services included in
the Provider’s service program and/or provided to the Member by the Provider,
including but not limited to focused therapy management. Additional
reimbursement will not be made to the Provider for these costs unless otherwise
agreed to by the parties in writing.

 

B. Covered Services
Provided To Physicians And Billed To BCBSM/BCN. When BCBSM and BCN invoke
the option to include Covered Services provided to Physicians under the this
Agreement, at a date to be determined by BCBSM and BCN, reimbursement for
Covered Services provided to Physicians and billed by Provider to BCBSM/BCN
will equal the Drug Product Cost as set forth below:

 

36

 

Drug
Product Cost

 

Reimbursement
for Specialty Medications is [ * ]

 

Reimbursement
for Specialty Medications [ * ]  is [ * ]. Once an [ * ] is
established, pricing shall change to [ * ].

 

Dispensing/Other
Fees

 

[ * ]

 

Pharmacy
Incentive

 

[ * ]

 

Ancillary
Products

 

If
Provider dispenses Ancillary Products to Physicians, Provider may bill Physicians
directly for these costs but BCBSM and BCN will not reimburse Provider for
these costs.

 

C. Covered Services
Provided And Billed To Physicians. When BCBSM and BCN invoke the option to
include Covered Services provided to Physicians under the pricing provided in
this Agreement, at a date to be determined by BCBSM and BCN, reimbursement for
Covered Services provided to Physicians and billed by Provider to Physicians
will equal the Drug Product Cost as set forth below:

 

Drug
Product Cost

 

Reimbursement
for Specialty Medications is[ * ].

 

Reimbursement
for Specialty Medications [ * ]  is [ * ]. Once an [ * ] is
established, pricing shall change to [ * ].

 

Dispensing/Other
Fees

 

[ * ].

 

Pharmacy
Incentive

 

[ * ]

 

37

 

Ancillary
Products

 

If
Provider dispenses Ancillary Products to Physicians, Provider may, bill
Physicians directly for these costs but BCBSM and BCN will not reimburse
Provider for these costs.

 

D.                                    No Other Remuneration

 

No other remuneration of any
kind will be paid to Provider in connection with this Agreement by BCBSM or BCN
or others, including but not limited to administrative fees, service fees,
shipping and handling costs, or sales tax, unless otherwise agreed to by the
parties in writing.

 

E.                                      [ * ]

 

38

 

ADDENDUM
A-1

 

[ * ]  — NOTE: Addendum A-1 has been deleted as it
is a confidential drug pricing schedule.

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

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42

 

ADDENDUM B BUSINESS

ASSOCIATE ADDENDUM

 

1.             Applicable Law and Policy. Provider acknowledges that
pursuant to this Agreement, it performs services or assists BCBSM and BCN in
the performance of a function or service that involves the use or disclosure of
a BCBSM/BCN member’s individually identifiable health information (IIHI). Consequently,
the Health Insurance Portability and Accountability Act of 1996, as amended (“HIPAA”),
and stricter state laws, as applicable, require that the IIHI be protected from
inappropriate uses or disclosures.

 

2.             Use or Disclosure of IIHI. IIHI, in electronic form or
otherwise, may be used or disclosed only when required by law or as otherwise
provided in this Agreement, unless the prior and specific informed written
consent of the person to whom the data or information pertains has been
obtained. Provider shall not, and shall ensure that its directors, officers,
employees, contractors and agents, do not, use or disclose IIHI received from
BCBSM or BCN in any manner that would constitute a violation of applicable law.

 

Provider shall not and shall
ensure that its directors, officers, employees, contractors, and agents do not
disclose IIHI received from BCBSM or BCN in any manner that would constitute a
violation of applicable law if disclosed by BCBSM or BCN, except that Provider
may disclose IIHI in a manner permitted pursuant to this Agreement or as
required by law. To the extent Provider discloses IIHI to a third party,
Provider must obtain, prior to making any such disclosure: (i) reasonable
assurances from such third party that such IIHI will be held confidential as
provided pursuant to this Agreement, and only disclosed as required by law or
for the purposes for which it was disclosed to such third party; and (ii) an
agreement from such third party to immediately notify Provider of any breaches
of the confidentiality of the IIHI, to the extent it has obtained knowledge of
such breach. Provider agrees to indemnify and hold BCBSM and BCN harmless from
any and all liability, damages, costs (including reasonable attorney fees and
costs) and expenses imposed upon or asserted against BCBSM and/or BCN arising
out of any claims, demands, awards, settlements or judgments relating to
Provider’s use or disclosure of IIHI contrary to the provisions of this
Agreement.

 

3.             Safeguards Against Misuse of Information. Provider agrees
that it will implement all appropriate safeguards to prevent the use or
disclosure of IIHI other than pursuant to the terms and conditions of this
Agreement. Such safeguards include administrative, physical, and technical
safeguards that reasonably and appropriately protect the Confidentiality, Integrity,
and Availability (as those terms are defined in 45 CFR §164.304) of the
electronic IIHI that it creates, receives, maintains, or transmits on behalf of
BCBSM and/or BCN as required by 45 CFR Part 160 and Subparts A and C of Part
164 (“Security Rule”).

 

43

 

4.             Reporting
of Disclosures of I1HI. Provider shall, within five (5) days of becoming aware of a Security
Incident (as defined in 45 CFR §164.304) or of a disclosure of IIHI in
violation of this Agreement by Provider, its officers, directors, employees,
contractors, or agents, or by a third party to which Provider disclosed IIHI pursuant
to Section 2 (Use or Disclosure of IIHI), report any such disclosure to BCBSM and
BCN.

 

5.             Agreements by Third
Parties. Provider shall enter into an agreement with any agent
or subcontractor that will have access to IIHI that is received from, or
created or received by Provider on behalf of, BCBSM and BCN pursuant to which
such agent or subcontractor agrees to be bound by the same restrictions, terms,
and conditions that apply to Provider pursuant to this Agreement with respect
to such IIHI, including that such agent or subcontractor implement reasonable
and appropriate safeguards to protect it as described in Section 3 (Safeguards
Against Misuse of Information).

 

6.             Access to
Information. Within five (5) days of a request by BCBSM or BCN
for access to IIHI about a member, Provider shall make available to BCBSM or
such IIHI for so long as such information is maintained by Provider. In the
event any individual requests access to IIHI directly from Provider, Provider
shall within two (2) days forward such request to BCBSM or BCN. Any denials of
access to the IIHI requested shall be the responsibility of BCBSM or BCN.

 

7.             Availability of
I1HI for Amendment. Within ten (10) days of receipt of a request
from BCBSM or BCN for the amendment of an individual’s IIHI, Provider shall
provide such information to BCBSM or BCN for amendment and incorporate any such
amendments in the IIHI as required by 45 CFR § 164.526.

 

8.             Accounting of
Disclosures. Within ten (10) days of notice by BCBSM or BCN to
Provider that it has received a request for an accounting of disclosures of
IIHI regarding an individual during the six (6) years prior to the date on
which the accounting was requested, Provider shall make available to BCBSM or
BCN such information as is in Provider’s possession and is required for BCBSM
and BCN to make the accounting required by 45 CFR §164.528. At a minimum,
Provider shall provide BCBSM and BCN with the following information: (i) the
date of the disclosure; (ii) the name of the entity or person who received the
IIHI, and if known, the address of such entity or person; (iii) a brief
description of the IIHI disclosed; and (iv) a brief statement of the purpose of
such disclosure which includes an explanation of the basis for such disclosure.
In the event the request for an accounting is delivered directly to Provider,
Provider shall within two (2) days forward such request to BCBSM and BCN. It
shall be BCBSM’s and BCN’s responsibility to prepare and deliver any such
accounting requested. Provider hereby agrees to implement an appropriate
recordkeeping process to enable it to comply with the requirements of this
Section 8.

 

9.             Availability of
Books and Records. Provider hereby agrees to make its internal
practices, books, and records relating to the use and disclosure of IIHI
received from, or created or received by Provider on behalf of, BCBSM and/or
BCN available to

 

44

 

the
Secretary of the Department of Health and Human Services for purposes of
determining BCBSM’s and/or BCN’s and Provider’s compliance with the Standard
for Privacy of Individually Identifiable Health Information, 45 CFR Parts 160
and 164 (“Privacy Standards”).

 

10.           Compliance with
Transaction Standards. If Provider conducts in whole or part electronic
Transactions on behalf of Organization for which Department of Health and Human
Services (DHHS) has established Standards, Provider will comply, and will require
any subcontractor or agent it involves with the conduct of such Transactions to
comply, with each applicable requirement of the Transaction Rule, 45 CFR Part
162. Provider will not enter into, or permit its subcontractors or agents to
enter into, any Trading Partner Agreement in connection with the conduct of
Standard Transactions on behalf of Organization that:

 

•                                         Changes the definition, data condition, or
use of a data element or segment in a Standard Transaction;

•                                         Adds any data element or segment to the
maximum defined data set;

•                                         Uses any code or data element that is marked “not
used” in the Standard Transaction’s implementation specification or is not in the
Standard Transaction’s implementation specification; or

•                                         Changes the meaning or intent of the Standard
Transaction’s implementation specification.

 

11.           Amendment to
Agreement. Upon the effective date of any amendment to the Privacy
Standards or the Security Rule or the effective date of any other final regulations
with respect to IIHI, this Section 11 and the Agreement of which it is part
will automatically be amended so that the obligations they impose on Provider
shall remain in compliance with such regulations.

 

45

 

ADDENDUM C SPECIALTY PHARMACY PROGRAM

REQUIREMENTS

 

Program applicants will be
required to initially meet and continue to meet the following standards and
BCBSM’s/BCN’s policies and procedures, which are subject to change from time to
time, in addition to the Specialty Pharmacy Agreement.

 

Note: Headings
in this document are for illustrative purposes only. Standards are not limited
to the headings under which they appear. Most standards listed are applicable
to multiple headings.

 

I.             STANDARDS
FOR MAINTAINING QUALITY HEALTH CARE

 

A.            Dispensing
and Delivery

 

1.                                       Agree
to dispense the quantity of prescription drugs indicated on the prescription,
up to a maximum of a ninety [ * ] day
supply per prescription or refill, or as otherwise permitted under the Member’s
Certificate and Program Requirements.

 

2.                                       Agree
to dispense all prescription drugs in a manner that conforms to all applicable federal,
state and local laws, standards of professional conduct and practice prevailing
in the community, all BCBSM and BCN reimbursement policies and requirements,
and the terms and conditions of the Specialty Pharmacy Agreement.

 

3.                                       Agree
to dispense all prescription drugs according to manufacturer’s recommendation.
All prescriptions will be sent in a manner to assure the integrity of the
prescriptions per manufacturer specifications, including temperature controls.

 

4.                                       Provide
unit dose preparations of prescriptions for those injectable medications where stability
is not an issue

 

5.                                       Agree
to dispense covered services in accordance with BCBSM’s and BCN’s prior authorization
requirements.

 

6.                                      Agree
to provide BCBSM and BCN with documentation of dispensing and non-dispensing errors
and how each of these errors was corrected.

 

B.                                    Quality Assurance

 

1.                                       Agree
to obtain and maintain accreditation in pharmacy from a nationally recognized accrediting
body, as determined by BCBSM and BCN (e.g., JCAHO, ACHC, etc.). BCBSM and BCN
having determined that ACHC is acceptable accreditation. Provider shall obtain
and maintain their Accreditation Commission of Health Care (ACHC) accreditation
in Specialty Pharmacy.

 

2.                                       Have
a comprehensive Quality Assurance/Quality Improvement (QA/QI) program and commit
to the following requirements and standards:

 

46

 

a.                                       Use
Best efforts to obtain a clean and legible prescription. Contact physician’s office
if script is not legible.

 

b.                                      Guarantee
a non-dispensing error rate of [ * ] or less, which includes but is not limited
to clerical errors, incorrect address, incorrect co-pays, physician information
and errors which impact the delivery and claim processing of orders.

 

c.                                       Guarantee
a dispensing error rate of [ * ] or less, which includes, but is not limited to
incorrect medication, incorrect dosage, incorrect dosing information and any medication
errors.

 

3.                                       Have
formal prescription quality assurance and error prevention policies, procedures
and protocols, and maintain documentation of utilization review activities. In
addition, provide copies to BCBSM and BCN of protocols used to ensure member
safety for specialty medication dispensed to members; maintain comprehensive
member profiling (medical histories) for all enrolled members; request
medication histories from each new member and maintain adequate drug risk
analysis procedures.

 

4.                                       Support
a comprehensive Hemophilia Care Management program, including the provision of
nursing services.

 

5.                                       Support
a comprehensive Compounding Management program, and upon request by BCBSM and
BCN, support a comprehensive program for IVIG Distribution Management, and/or
Chemotherapy Care Management.

 

6.                                       Upon
request by BCBSM and/or BCN, provide customize services to meet the unique clinical
and psycho-social-economic needs of patients.

 

7.                                       Have
a reliable product recall policy and procedures.

 

8.                                       Acquire
all products and supplies from reputable manufacturers.

 

9.                                       Pro-actively
contact prescribing physicians to confirm prescriptions, dosing, regimen, etc. as
appropriate.

 

10.                                 Demonstrate
how automation is used and have acceptable quality control policies and procedures
to assure quality care.

 

C.                                     Member Education/Assistance and Monitoring

 

1.                                       Educate
members about their disease state (including long-term and short-term effects
if treated and untreated) and their medication, including benefits, side
effects and drug interactions.

 

2.                                       Coordinate
member education and management with BCBSM’s and/or BCN’s case management
departments.

 

3.                                       Include
high-quality educational materials as necessary, subject to BCBSM and BCN prior
review and written approval.

 

4.                                       Document
BCBSM and BCN member compliance and other applicable clinical and quality of
life data as applicable to members’ therapy regimens.

 

5.                                       Provide
instructions to members on use of medications and information received in on line
drug messages (e.g., DUR).

 

6.                                       Provide
member issue triage and resolution process for program inquiries.

 

47

 

D.                                    Credentialing

 

1.                                       Have
all licenses and permits required by local, state and federal authorities
applicable to dispensing specialty medications (including certain controlled
medications) as well as wholesale / distribution licenses (and registrations)
to service BCBSM and BCN physicians.

 

2.                                       Comply
with all state and federal requirements applicable to dispensing and mailing prescriptions.

 

3.                                       Provide
BCBSM and BCN with documentation of provider’s last inspection by its State Board
of Pharmacy and all other inspections (e.g., flow hood inspection, etc.)

 

E.                                      Staffing

 

1                                          Employ
or contract with pharmacists that have and maintain current/valid State Board
of Pharmacy Licenses that contain no restrictions.

 

2.             Re-verify pharmacist, technician, RN, LPN, etc.
licensure annually.

 

3.                                       Maintain
a pharmacist-to-technician ratio consistent with good pharmacy practice standards
as approved by BCBSM and BCN or as specified by the applicable State Board of
Pharmacy.

 

4.                                       Maintain
rigorous initial training and ongoing training for all clinicians.

 

5.                                       Provide
all (non-clinician) associates who will service members, with comprehensive training
regarding the standards for triaging clinical issues to a clinician.

 

6.                                       Provide
comprehensive training for all associates (clinicians and non-clinicians) who
will service prescribing physicians or physician’s office staff.

 

II.                                     STANDARDS FOR CONTROLLING HEALTH CARE COSTS 

A.                                   Dispensing

 

1                                          Dispense
generic equivalent prescription drugs unless “Dispense as Written” is required by
the physician or unless the member requests a brand name prescription drug. If
a member requests a brand name prescription drug when a generic drug is
available, the member is responsible for paying the difference in cost between
the brand and generic drugs, as well as the member co-payment and deductible if
required by applicable Plan Design.

 

2.                                       Ship
dispensed specialty medication and ancillary products to members at provider’s expense.

 

3.                                       Administer
a prior authorization program for all or select products covered by BCBSM and/or
BCN, at BCBSM’s and/or BCN’s discretion, subject to existing standards and criteria
and standards developed by BCBSM, BCN and provider. BCBSM and BCN will have
final approval of criteria and standards.

 

4.                                       Pro-actively
support the use of generic drugs whenever available.

 

5.                                       Possess
specific programs, protocols, tools, etc., to manage or prevent waste.

 

48

 

6.                                       Agree
to comply with BCBSM and BCN formulary, clinical programs and drug policies.

 

B.                                     Pricing

 

[ * ]

 

C.                                     Payments

 

1.                                       Agree
to issue a credit to the account of BCBSM, BCN, a physician or the member,
pursuant to procedures outlined by BCBSM and BCN, if there is an overpayment by
one of these parties. In the event of an under-payment by BCBSM, BCN, a
physician or a member, agree to obtain payment pursuant to BCBSM and BCN
policies. In addition, Provider agrees to reconcile overpayments and
underpayments and provide reports to BCBSM and BCN pursuant to their
requirements.

 

2.                                       Agree
to cooperate with the BCBSM’s and BCN’s Audit and Compliance Units, and
recovery of any overages identified as a result of an audit.

 

III.                                 STANDARDS FOR ASSURING APPROPRIATE UTILIZATION
OF HEALTH CARE SERVICES

 

1                                          Provide
best-in-class utilization management programs to improve therapy adherence, appropriate
utilization management standards and patient outcomes

 

2.                                       Comply
with periodic audits of claims and verification of performance standards. Once audits
are complete, that audit is considered closed and is no longer eligible for
further audits. However, this shall not prevent BCBSM and BCN or Provider from complying
with requests for audit from external sources (such as customer groups,
government agencies, etc.).

 

3.                                       Provide
BCBSM and BCN with a comprehensive package of reports, at least monthly, that
detail utilization by type (Pharmacy / Medical), billing report, prescriber,
patient and other factors determined by BCBSM and BCN.

 

IV.                                STANDARDS FOR ASSURING
REASONABLE LEVELS OF ACCESS TO HEALTH CARE SERVICES

 

1                                          Have
acceptable hours of operation, as determined by BCBSM and BCN.

 

2.                                       Ship
dispensed prescription drugs to members at provider’s expense and guarantee delivery.
In the event of a claim of non-delivery and provider cannot prove that delivery
occurred, provider must immediately replace the order without charge and ship
the order via overnight mail.

 

3.                                       Have
an established infrastructure to fill prescriptions at a rate sufficient to
meet the needs of BCBSM and BCN member population

 

4.                                       Have
sufficient capacity and experience in the specialty pharmacy business and the infrastructure
to support the dispensing of at least 50,000 specialty pharmacy prescriptions
per year.

 

5.                                       Agree
to dispense administration supplies to Members, as appropriate, with injectable
orders at all inclusive pricing.

 

6.                                       Guarantee
a [ * ] or less out-of-stock rate, excluding manufacturer backorders.

 

7.                                       Have
the ability to provide all specialty medications and ancillary products covered
by BCBSM and BCN.

 

8.                                       Support
a next-day delivery capability.

 

9.                                       Provide
same-day (stat) delivery capabilities directly (or in partnership with a Michigan
based pharmacy capable of meeting this service requirement).

 

10.                                 Agree
not to return unfilled any prescription to a member unless provider provides a written
explanation to the member stating the reason for the return of the prescription
and advising the member and the member’s physician of the member’s rights to
appeal the coverage denial.

 

49

 

11.                                 Guarantee
that [ * ] of prescriptions requiring no intervention (including out-of-stock) will
be sent or scheduled to be sent within an average of 5 calendar days from the
date the prescription is received, but none shall exceed 10 calendar days,
excluding manufacturer back order without notification to BCBSN and BCN. Orders
received after normal business hours will be considered to have been received
on the next business day.

 

12.                                 Guarantee
that [ * ] of prescriptions requiring intervention (including out-of-stock)
will be sent or scheduled to be sent within [ * ] calendar days from the date
the prescription is received, but none shall exceed [ * ] calendar days without
notification to BCBSM and BCN, excluding manufacturer back order. Orders
received after normal business hours will be considered to have been received
on the next business day.

 

13.                                 Have
an owned and operated Michigan- based dispensing facility to support BCBSM’s and
BCN’s member population or agree to provide specialty medications in
association with a local pharmacy in emergency and ‘stat’ of medication within
the same day to any geographic location within Michigan or in locations where
significant BCBSM or BCN population resides outside of Michigan.

 

14.                                 Have
an established disaster recovery plan that enables provider to perform its
duties, obligations and services under this program within forty-eight (48)
hours of a disaster.

 

15.                                 Provide
easy access to BCBSM and BCN members for order requests, refill requests, documentation,
etc.

 

V.            OTHER STANDARDS

 

A.                                   Telephone, Written and Internet
Communications

 

1.                                       Provide
dedicated Toll-free telephone access for use by members, BCBSM and BCN and physicians
and a dedicated customer service center to handle BCBSM and BCN member calls. Provide
TDD-TTY services for hearing impaired to access Customer Service Department.

 

2.                                       Locate
call center within the continental US and agree to no outsourcing without
written permission from BCBSM and BCN.

 

3.                                       Guarantee
that less than [ * ]% of calls will be abandoned; less than [ * ] % of calls
will be blocked and that the average time to answer a call is less than [ * ].

 

4.                                       Maintain
a website that contains updated information regarding, among other things: on line
order and status, prescription pricing information, coverage and benefit plan information,
health news information and health assessment tools and resources.

 

5.                                       Clearly
offer the ability to speak with a pharmacist, nurse and administrative support associate
in all communications with members (telephone, writing, publications, etc.) and
provide a client service team which will respond to BCBSM’s and BCN’s questions,
including but not limited to member concerns, claim payments, and daily
interaction between the parties.

 

6.                                       Prepare
and distribute group and member communications on program use and access to
services.

 

50

 

B.                                     Claims Submission

 

1.                                       Guarantee
that claims will be submitted to the claims processor(s) in accordance with BCBSM
and BCN policies and requirements.

 

2.                                       For
specialty medications dispensed to Members for self-administration, submit
claims on-line utilizing the most current NCPDP format, to BCBSM’s and BCN’s
preferred claims processor(s) (or via a mutually agreeable format and
submission method.) For specialty medications dispensed to physicians for in-office
administration, submit claims electronically using the professional 837 HIPAA
format or other designated form as required by BCBSM or BCN. Accept edits
according to the most current NCPDP Telecommunication Standard for on-line
claim submissions. Agree to not turn off edits at the facility level and
respond appropriately to on-line messages.

 

3.                                       Agree
to reconcile [ * ]% of Provider’s reimbursements and appeal any disputed claims
within a maximum of [ * ] days from date payment is made.

 

4.                                       React
appropriately to on-line edits which may adversely affect the member’s medical status
or coverage.

 

5.                                       Reverse
claims for shipments that are lost or damaged, or reship at no additional
charge. If a claim cannot be reversed or reshipped at no charge, handle as a
dispensing error.

 

6.                                       Establish
technical connections necessary to submit claims transactions for members using
BCBSM’s and BCN’s preferred claims processors and agree to comply with BCBSM’s
and BCN’s administrative requirements governing the use of these systems. Provider
must pay the cost of all system modifications, line charges and other communication
costs associated with changes to provider’s systems as well as all fees charged
by the Blues claims processor(s).

 

7.                                       Agree
to submit [ * ]% of initial claims within [ * ] days of the date of service,
otherwise BCBSM and BCN will be under no obligation to pay the claims.

 

8.                                       Guarantee
that [ * ]% of all claims submitted by Provider to the claims processor(s) will
have no errors.

 

C.                                     Complaint Resolution

 

1                                          Maintain
a formal procedure to assure complaint resolution within 5 calendar days of receipt.
Provider will provide BCBSM and BCN with reports regarding complaints,
including the number and types of complaints.

 

2.                                       Maintain
policies and procedures to address member problems, complaints and timely resolution.

 

3.                                       Meet
with BCBSM and BCN monthly to review implementation, performance, resolve member and ordering physician issues
and complaints, review reports, billing issues, payment issues, audit issues,
discuss areas for improvement, etc.

 

D.                                    Disaster Recovery

 

1.                                       Maintain
and document a comprehensive disaster recovery program for all technical
systems (computer, telephone,
fax, etc.). The plan must provide for the backup, storage

 

51

 

and restoration of data
and information used and generated as a result of this program and must comply
with HIPAA.

 

E.                                      Information Technology

 

I                                            Provide
comprehensive information
technology capabilities required to service the proposed program and provide
the operational capabilities comparable to nationally recognized, best-in-class
specialty pharmacies.

 

F.                                      Miscellaneous

 

1.                                       Be
in the business of distributing
specialty medications to physicians for office administration.

 

2.                                       Provide
acceptable references.

 

3.                                       Agree
to not outsource any work under this program outside the United States without the
written consent of the BCBSM and BCN.

 

4.                                       Be
fully HIPAA compliant, which includes Identifiers, Privacy, Security, and
Electronic Transactions/Code Sets.

 

5.                                       Have
no felony convictions of provider, provider’s officers or directors.

 

6.                                       Provide
an experienced and dedicated
account management team and establish a dedicated and branded (as defined by
BCBSM and BCN) customer business unit (CBU) appropriately staffed to handle the
enrolled BCBCM/ BCN population.

 

7.                                       Submit
all pertinent clinical
information on new drugs to BCBSM and BCN for drug coverage and policy
decisions.

 

8.                                       Provide
a comprehensive implementation plan for all services (or select services as may
be awarded) to BCBSM and BCN to assure a smooth program launch on a date
specified by BCBSM and BCN.

 

9.                                       Agree
to not assess any implementation charges to BCBSM and BCN for any services performed
in connection with implementation(s).

 

10.                                 Adhere
to Omnibus Budget Reconciliation
Act requirements in the dispensing process.

 

I1                                      Agree
to accept personal checks, cashier checks, money orders and credit cards as
well as other methods of payment for covered services. In the event that
Members are not able to afford their lump sum out-of-pocket expense, Provider
may provide payment plans to assist affordability of care.

 

12.                                 Maintain
valid general liability insurance for all facilities in minimum amounts of $1,000,000
per occurrence and $5,000,000 aggregate coverage. Maintain valid professional
liability (druggist) and product liability in minimum amount of $10,000,000 per
occurrence.

 

13.                                 Be
able to meet all state and
federal requirements pertaining to this program.

 

14.                                 Agree
to not utilize BCBSM’s and BCN’s corporate names or logos in any way or form without
the written approval of BCBSM and BCN.

 

15.                                 Agree
to accept all terms and conditions of the Specialty Pharmacy Agreement.

 

52

 

16.                                 Have
the ability to effectively manage unique benefit designs, eligibility criteria,
reimbursement variations, etc. by line of business / product / account.

 

17.                                 Demonstrate
the ability to support the full book of BCBSM’s and BCN’s specialty pharmacy
business to bid as an ‘exclusive provider(1), or similarly as a ‘semi-exclusive’
provider as those terms are defined in the Request for Proposal.

 

18.                                 Be
free of conflicts of interest relative to BCBSM and BCN, their groups and
members during the term of the Specialty Pharmacy Agreement.

 

19.                                 Recognize
that BCBSM will consider any other matters that materially affect the provider’s
performance in the selection process.

 

20.                                 Recognize
that customer preference maybe considered in the selection process.

 

21.                                 Demonstrate
an ability to cooperate with BCBSM and BCN, their members, groups and providers.

 

22.                                 Recognize
that BCBSM and BCN have the right to exercise business judgment in the selection
process.

 

23.                                 Agree
that the Request for Proposal must be completed in it’s entirely at the time of
submission.

 

24.                                 Be
financially stable as defined by BCBSM and BCN at all relevant times.

 

53

 

ADDENDUM D REBATE / DISCLOSURE

REQUIREMENTS

 

1.             Provider shall not apply for or receive any Rebates,
including BCBSM and BCN Rebates (other than purchase price discounts), from any
pharmaceutical manufacturer or other person or entity, in connection with this
Agreement, unless BCBSM and BCN otherwise agree in writing. Provider warrants
this to BCBSM and BCN. BCBSM and BCN, or their representative, may apply for
and receive Rebates, including BCBSM and BCN Rebates, related to this Agreement.
Provider will cooperate with BCBSM and BCN and/or their representatives, and
will provide data to support application for the various Rebates upon request
by BCBSM and BCN.

 

2.             Provider shall certify annually in writing on or before
December 31 to BCBSM and BCN that Provider, its officers, directors, employees
and subcontractors did not apply for or receive any Rebates in connection with
this Agreement, including BCBSM and BCN Rebates.

 

3.             Provider shall provide BCBSM and BCN with quarterly and
annual reports disclosing Provider funding and any clinical consultant or
physician education program in which BCBSM and BCN participate, unless BCBSM
and BCN otherwise agree in writing.

 

4.             If requested by BCBSM and/or BCN, Provider agrees to
provide the terms of its manufacturer contracts and will provide copies of its
contracts to a third party auditor, subject to a confidentiality agreement, so
that compliance with this Addendum can be verified.

 

5.             Provider’s obligations under this Addendum D shall
survive termination or expiration of this Agreement.

 

54

 

ADDENDUM E

 

ADDITIONAL SERVICE REQUIREMENTS AND STANDARDS 1.

 

Customer (Patient / Provider) Service Requirements &
Standards

 

A.                                   Hours of Operation:

 

Provider’s
hours of operation will be as follows:

 

Customer
Service: Monday thru Friday-8:00 AM - 8:00 PM (Eastern) Saturdays-8:00 AM -
8:00 PM (Eastern) Sundays- 8:00 AM-1:00 PM (Eastern)

 

Pharmacy
Department: Monday thru Friday-8:00 AM - 8:00 PM (Eastern) Billing /
Reimbursement: Monday thru Friday-8:00 AM - 8:00 PM (Eastern) Emergency Access
/ Clinical Support:             24 / 7 /
365

 

B.                                      Telephone Access
Requirements, & Standards:

 

1.              Provider shall provide dedicated
toll-free telephone access to Customer Service for the Specialty Pharmacy
Program for use by Members, BCBSM/BCN and physicians.

 

2.              Provider shall provide 24 hour
access to a pharmacist and registered nurse via dedicated toll-free telephone
service.

 

3.              Provider shall provide Member
issue triage and resolution process between BCBSM, BCN and Provider for
Specialty Pharmacy Program inquiries.

 

4.              Provider will provide dedicated
customer service center to handle BCBSM and BCN member calls.

 

5.              Provider shall provide TDD-TTY
services for hearing impaired to access Customer Service Department.

 

C.                                      Web Access Requirements:

 

Provider’s standard website capabilities must
include: 

Online
prescription ordering and status 

Prescription pricing information Coverage and benefit plan information

 

55

 

Health
news information

 

Health
assessment tools and resources

 

2. Operational Service Requirements & Standards

 

A.            Fulfillment
Capabilities Requirements:

 

1.             Direct to patient

 

a.              Provider must have infrastructure
to fill prescriptions at a rate sufficient to meet the needs of the BCBSM and
BCN patient population.

 

b.             Provider shall have sufficient
infrastructure and capacity to support at least 50,000 specialty pharmacy
prescriptions per year.

 

2.                                       Direct to provider. Provider must meet the
following direct to provider requirements:

 

a.
Provider shall have sufficient infrastructure to support distribution to
BCBSM/BCN Physicians.

 

B.                                    Hemophilia Care Management—as part
of the service program, Provider shall provide a Hemophilia Care Management
Program if requested by BCBSM and/or BCN as follows:

 

1.             Provider shall support a
comprehensive Hemophilia management program.

 

2.             Provider shall provide tailored
services unique to the clinical, psycho-social-economic needs of individuals
with Hemophilia or other bleeding disorders.

 

3.             Provider shall provide utilization management
programs that promote excellent patient care and appropriate utilization (cost)
management standards.

 

4.             Provider shall provide nursing
services as part of the Hemophilia management program.

 

C.                                    Other Care Management Programs—Provider shall provide a Compounding Management
Program as follows and, if requested by BCBSM and/or BCN, Provider shall
provide IVIG Distribution Management and Chemotherapy Care Management Programs
as follows:

 

56

 

1.             Provider shall support a
comprehensive therapy management program for a Compounding Management Program
and, if requested by BCBSM and/or BCN, for an IVIG Distribution Management
Program and Chemotherapy Care Management Program.

 

2.             Provider shall customize services
to meet the unique clinical and psycho-social-economic needs of patients.

 

3.             Provider shall provide utilization management
programs that promote excellent patient care and appropriate utilization (cost)
management standards.

 

D.            Quality Assurance and
Utilization

 

1              Provider shall provide best in
class utilization management programs to improve therapy adherence, compliance
and patient outcomes.

 

2.             Provider shall have a comprehensive
Quality Assurance / Quality Improvement (QA/QI) program and shall meet the
following requirements and standards:

 

a.              Provider shall provide BCBSM and
BCN with documentation of dispensing and non-dispensing errors and how each of
these errors was corrected.

 

b.             Provider will contact physician’s
office and clarify any part of a script that is not legible.

 

c.              Provider must have formal
prescription quality assurance and error prevention policies, procedures and
protocols - and shall maintain documentation of utilization review activities. Copies
of these documents must be provided to BCBSM and BCN upon request.

 

d.             Provider shall provide BCBSM and
BCN with copies of protocols used to ensure patient safety for products
dispensed to BCBSM and BCN members.

 

e.              Provider shall provide best in
class utilization management programs to improve therapy adherence, compliance
and patient outcomes.

 

f.              Provider shall have a reliable
product recall policy and procedures.

 

57

 

g.
Provider shall maintain comprehensive patient profiles (medical histories) for
all enrolled patients and shall request medication histories from each new
patient.

 

h.
Provider shall acquire all products and supplies from reputable manufacturers.

 

i.
Provider (Pharmacists) will pro-actively contact prescribing physicians to
confirm prescriptions, dosing, regimen, etc.

 

j.
Provider shall demonstrate how automation is used and have acceptable quality
control policies and procedures to assure quality care.

 

k.
Provider shall maintain adequate drug risk analysis procedures.

 

I.
Provider will maintain a formal procedure to assure complaint resolution within
5 calendar days of receipt of complaint, and will immediately forward the
member complaint to BCBSM or BCN, as applicable, when the member or his/her
representative indicates the member wishes the matter to be handled as an
expedited grievance. Provider will provide reporting on complaints with number
and types of complaints in the form required by BCBSM/BCN.

 

m.
Provider will adhere to the Ominbus Budget Reconciliation Act requirements in
the dispensing process.

 

n
Provider will possess specific programs, protocols, tools, etc., to manage or
prevent waste.

 

o.
Provider will comply with BCBSM’s and BCN’s formulary, clinical programs and
drug policies.

 

E.             Patient Education and
Assistance and Monitoring

 

1              Provider shall send high-quality
educational materials with all filled prescriptions, subject to BCBSM’s and BCN’s
prior written approval.

 

2.             Provider shall prepare and distribute
group and member communications on program use and access to services, subject
to BCBSM and BCN prior approval.

 

3.             Provider shall make a Nurse, Pharmacist
and administrative support associates easily accessible to answer Member
questions.

 

58

 

4.             Provider shall provide easy access
to patients for order requests, refill requests, documentation, etc.

 

5.             Provider shall maintain policies
and procedures to address patient problems, complaints and timely resolution.

 

6.             Provider shall clearly offer the
ability to speak with a Pharmacist or Nurse in all communications with patients
(telephone, writing, publications, etc.).

 

7.             Provider shall document patient
compliance and other applicable clinical and quality of life data as applicable
to patients’ therapy regimen.

 

3.             Training

 

1.             Provider shall maintain rigorous
initial and ongoing training for all clinicians.

 

2.             Provider shall provide
comprehensive training for all non-clinician associates who will service
Members with respect to the triage of clinical issues.

 

3.             Provider shall provide
comprehensive training for all associates (clinicians and non-clinicians) who
will service prescribing physicians (or office staff)

 

4.             Contractual
Service Requirements

 

A.            Capabilities
- General/IT Systems/Eligibility
& Membership/Reporting

 

1.             Provider will effectively manage
unique benefit designs, eligibility criteria, reimbursement variations, etc. by
line of business / product / account.

 

2.             Provider agrees to -

 

a.             Provide an owned and operated
Michigan based dispensing facility to support the BCBSM and BCN population, or

 

b.             Provide Specialty Medications in
association with a local pharmacy in emergency and ‘stat’ situations. Emergency/stat
situations require delivery of medication within the same day to any geographic
location within Michigan or in locations where significant BCBSM or BCN
population resides outside of Michigan.

 

59

 

3.
Provider will provide comprehensive Information Technology capabilities
required to service the proposed program and provide the operational
capabilities comparable to nationally recognized, best-in-ciass specialty
pharmacies.

 

B.            Account Service and
Specialty Pharmacy Program Implementation

 

1.              Provider will submit all pertinent
clinical information on new drugs to BCBSM and BCN for drug coverage and policy
decisions.

 

2.              Provider will provide a
comprehensive Implementation Plan for all services (or select services as may
be awarded) to BCBSM and BCN to assure a smooth Specialty Pharmacy program
launch.

 

3.              Provider will not assess any
Implementation charges to BCBSM or BCN for any services performed in connection
with the implementation(s).

 

4.              Provider will meet with BCBSM and
BCN monthly to review implementation, performance, resolve patient and ordering
physician issues and complaints, review reports, billing issues, payment
issues, audit issues, to discuss areas for improvement, etc.

 

60

 

ADDENDUM F

PERFORMANCE GUARANTEES

 

	
  Item

  #

  	
   

  	
  Performance
  Guarantee:

  	
   

  	
  Service
  Standard:

  	
   

  	
  Penalty:

  
	
  1

  	
   

  	
  Provider guarantees that
  less than [ * ]%of callswillbe abandoned.

  	
   

  	
  Forthepurposesofthis
  Agreement, “abandoned” means that Provider did not answer the incoming call
  within 20 seconds and the customer disconnected after placing the call but
  before thecallwasansweredby Provider.

  	
   

  	
  [ * ]

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2

  	
   

  	
  Provider guarantees that
  less than [ * ]% of calls will be blocked.

  	
   

  	
  For the purposes of this
  Agreement, “blocked” calls are incoming phone calls that, due to volume, can
  not be completed. They are calls that are initially received by the Provider
  telephonic system, but are not received by either a live representative or
  the Interactive Voice Response (IVR) system. D

  	
   

  	
  [ * ]

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3

  	
   

  	
  Provider guarantees an
  average speed to answer of less than [ * ].

  	
   

  	
  Forthepurposesofthis
  Agreement, “answer” means by a live representative or Interactive Voice
  Response (IVR) system.

  	
   

  	
  [ * ]

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4

  	
   

  	
  Provider guarantees that [
  * ]% of written inquiries will be responded to within [ * ] calendar days.

  	
   

  	
  Forthepurposesofthe
  Agreement,“respondedto” means by a letter sent within 5 calendar days of
  receipt of written inquiry. “Written Inquiries” include inquiries received by
  fax, U.S. mailorprivatecarrier,or electronic mail. It is understood that
  calendar days shall exclude recognized national holidays.

  	
   

  	
  [ * ]

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5

  	
   

  	
  Provider guarantees that [
  * ]% of claims will be submitted in accordance with BCBSM and BCN policies,
  procedures and administrative requirements, which include

  	
   

  	
  a TBD

  	
   

  	
  N/A*

  

 

61

 

	
  Item

  #

  	
   

  	
  Performance
  Guarantee:

  	
   

  	
  Service
  Standard:

  	
   

  	
  Penalty:

  
	
   

  	
   

  	
  the requirements contained
  in 2.13 of the Specialty Pharmacy Agreement.

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6

  	
   

  	
  Provider guarantees that [
  * ]% of all claims processed will have no financial errors.

  	
   

  	
  For purposes of this
  Agreement, “no financial error” means a complete and accurate claim for
  payment of Covered Services, free of outstanding subrogation, coordination of
  benefits, or other secondary payer issues, filed in the correct electronic
  format and containing all pertinent information as may be required in
  applicable statutory and regulatory guidelines and in compliance with
  applicable BCBSM/BCN policies, procedures and administrative requirements.

  	
   

  	
  N/A*

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7

  	
   

  	
  Provider guarantees that [
  * ]% of all claims submitted by Provider to the claims processor will have no
  errors.

  	
   

  	
  For purposes of this
  Agreement, “no errors” means a complete and accurate claim for payment of
  Covered Services, free of outstanding subrogation, coordination of benefits,
  or other secondary payer issues, filed in the correct electronic format and
  according to the applicable fee schedule, free of incorrect patient, charge,
  dosage, or quantity information, in compliance with applicable BCBSM/BCN
  policies, procedures and administrative requirements, excluding incorrect
  price for medical claims.

  	
   

  	
  N/A*

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8

  	
   

  	
  Provider guarantees that [
  * ]% of initial claims will be submitted within [ * ] days of the date of
  service; otherwise BCBSM and BCN will be under no obligation to pay for
  services rendered.

  	
   

  	
  For the purposes for this
  agreement, “initial claim” does not include any resubmitted claim for claims
  already submitted or processed.

  	
   

  	
  N/A*

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9

  	
   

  	
  Provider guarantees that
  Provider will reconcile [ * ]% of reimbursements and appeal any disputed
  claims

  	
   

  	
  N/A

  	
   

  	
  [ * ]

  

 

62

 

	
  Item

  #

  	
   

  	
  Performance
  Guarantee:

  	
   

  	
  Service
  Standard:

  	
   

  	
  Penalty:

  
	
   

  	
   

  	
  within a maximum of [ * ]
  days from date the payment is made.

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10

  	
   

  	
  Provider guarantees that [
  * ]% of prescriptions requiring no intervention (including out of stock) will
  be sent or scheduled to be sent within average of [ * ] calendar days from
  the date the prescription is received, but none shall exceed [ * ] calendar
  days, excluding manufacturer back order.

  	
   

  	
  For purposes of this
  Agreement, orders received after normal business hours will be considered to
  have been received on the next business day.

  	
   

  	
  [ * ]

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  11

  	
   

  	
  Provider guarantees that [
  * ]% of prescriptions requiring intervention (including out of stock) will be
  sent or scheduled to be sent within average of [ * ] calendar days from the
  date the prescription is received, but none shall exceed [ * ] calendar days,
  excluding manufacturer back order, without notification to BCBSM and BCN.

  	
   

  	
  For purposes of this
  Agreement, orders received after normal business hours will be considered to
  have been received on the next business day.

  	
   

  	
  [ * ]

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  12

  	
   

  	
  Provider guarantees a
  non-disoensinq error rate of [ * ]% or less.

  	
   

  	
  For the purposes of this
  Agreement, “non-dispensing error” includes but is not limited to clerical
  errors, incorrect address, incorrect co-pays, physician information and
  errors which impact the delivery and claim processing of orders.

  	
   

  	
  [ * ]

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  13

  	
   

  	
  Provider guarantees a
  dispensing error rate of [ * ]% or less.

  	
   

  	
  For the purpose of this
  Agreement, “dispensing error” includes, but is not limited to incorrect
  medication, incorrect dosage, incorrect dosing information and any medication
  errors.

  	
   

  	
  [ * ]

  

 

63

 

	
  Item

  #

  	
   

  	
  Performance
  Guarantee:

  	
   

  	
  Service
  Standard:

  	
   

  	
  Penalty:

  
	
  14

  	
   

  	
  Provider guarantees an
  out-of-stock rate of [ * ]% or less, excluding manufacturer backorders.

  	
   

  	
  N/A

  	
   

  	
  [ * ]

  

 

*Each
$[ * ]  penalty will fluctuate in direct proportion
to Provider’s Specialty Medication sales through the BCBSM and BCN Specialty
Pharmacy program (self-administered and Physician office) relative to sales of
$[ * ]. Thus, each $[ * ] penalty
will fluctuate as follows:

 

	
  Sales Volume

  	
   

  	
  Impact
  on $[ * ]Penalty

  	
   

  	
  Resulting
  Penalty

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  $[ * ]

  	
   

  	
  Cut
  in half No

  	
   

  	
  $[ * ]

  
	
  $[ * ]

  	
   

  	
  impact
  One and

  	
   

  	
  $[ * ]

  
	
  $[ * ]

  	
   

  	
  a
  half Double

  	
   

  	
  $[ * ]

  
	
  $[ * ]

  	
   

  	
   

  	
   

  	
  $[*]

  

 

Provider’s
obligations under this Addendum F shall survive termination or expiration of
this Agreement.

 

64

 

Addendum G

Medicare Attestation

 

1.             Provider
acknowledges to the best of its knowledge, information and belief, there are no
past or pending investigations, legal actions, or matters subject to
arbitration involving Provider or any key management, executive staff, or any
major shareholders (5% or more) of Provider on matters relating to payments
from governmental entities, both federal and state, for healthcare and/or
prescription drug services.

 

2.             Provider
acknowledges to the best of its knowledge, information, and belief that Provider
has not been criminally convicted nor has a civil judgment been entered against
it for fraudulent activities nor is it sanctioned under any Federal program
involving the provision of health care or prescription drug services.

 

3.             Provider acknowledges to the best
of its knowledge, information and belief, neither Provider nor any key
management, executive staff, or any major shareholders (5% or more) of Provider
appear in the List of Excluded Individuals/Entities as published by the
Department of Health and Human Services Office of the Inspector General, nor in
the List of Debarred Contractors as published by the General Services
Administration.

 

The List of Excluded Individuals/Entities published by the Department
of Health and Human Services Office of the Inspector General can be found at
http://oiq.hhs.gov/fraud/exclusions/database.html. The List of Debarred
Contractors published by the General Services Administration can be found at
http://epls.arnet.gov/.

 

4.             Provider is obligated to notify
BCBSM immediately to the best of its knowledge, information and belief of any
change in circumstances occurring after the Effective Date of this Medicare
Amendment which would require the Provider or its key management, executive
staff, or any major shareholders (5% or more) to then respond affirmatively to
any of the questions posed in paragraphs 1, 2 and 3 of this Medicare
Attestation.

 

65

 

 

 

Statement of  Work #1

to

SPECIALTY
PHARMACY AGREEMENT

 

 

BLUE CROSS AND BLUE SHIELD OF MICHIGAN,

 

BLUE CARE NETWORK OF MICHIGAN

 

and OPTION

 

CARE, INC.

 

 

[ * ] = THIS STATEMENT OF WORK IS CONFIDENTIAL INFORMATION AND HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

 

 

 

[ * ] = CERTAIN CONFIDENTIAL INFORMATIONCONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2
OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

 

 

 

 

TABLE OF CONTENTS

 

	
   

  	
  PAGE

  
	
  ARTICLE I

  	
   

  
	
  DEFINITIONS

  	
  1

  
	
   

  	
   

  
	
  ARTICLE II

  	
   

  
	
  PROVIDER RESPONSIBILITIES

  	
  4

  
	
   

  	
   

  
	
  ARTICLE III

  	
   

  
	
  BCBSM AND BCN RESPONSIBILITIES

  	
  18

  
	
   

  	
   

  
	
  ARTICLE IV

  	
   

  
	
  MUTUAL RESPONSIBILITIES

  	
  19

  
	
   

  	
   

  
	
  ARTICLE V

  	
   

  
	
  RECORDKEEPING AND AUDITS

  	
  21

  
	
   

  	
   

  
	
  ARTICLE VI

  	
   

  
	
  INDEMNIFICATION

  	
  23

  
	
   

  	
   

  
	
  ARTICLE VII

  	
   

  
	
  RIGHT OF RECOVERY

  	
  23

  
	
   

  	
   

  
	
  ARTICLE VIII

  	
   

  
	
  ASSIGNMENT

  	
  24

  
	
   

  	
   

  
	
  ARTICLE IX

  	
   

  
	
  AMENDMENT AND WAIVER

  	
  24

  
	
   

  	
   

  
	
  ARTICLE X

  	
   

  
	
  TERM, RENEWAL AND EXPIRATION

  	
  25

  
	
   

  	
   

  
	
  ARTICLE XI

  	
   

  
	
  DISPUTES AND APPEALS

  	
  27

  
	
   

  	
   

  
	
  ARTICLE XII

  	
   

  
	
  BUSINESS CONTINUITY AND DISASTER RECOVERY

  	
  27

  
	
   

  	
   

  
	
  ARTICLE XIII

  	
   

  
	
  SERVICE MARKS

  	
  28

  
	
   

  	
   

  
	
  ARTICLE XIV

  	
   

  
	
  MARKETING PROTOCOL

  	
  28

  

 

 

	
  ARTICLE XV

  	
   

  
	
  MISCELLANEOUS

  	
  30

  
	
   

  	
   

  
	
  ADDENDUM
  A

  	
   

  
	
  SPECIALTY PHARMACY PROGRAM REIMBURSEMENT RATES

  	
  36

  
	
   

  	
   

  
	
  ADDENDUM
  A-1

  	
   

  
	
  NEGOTIATED AWP DISCOUNT FOR SPECIALTY MEDICATIONS BYNDC

  	
  41

  
	
   

  	
   

  
	
  ADDENDUM B

  	
   

  
	
  BUSINESS
  ASSOCIATE AGREEMENT

  	
  48

  
	
   

  	
   

  
	
  ADDENDUM C

  	
   

  
	
  SPECIALTY
  PHARMACY PROGRAM REQUIREMENTS

  	
  51

  
	
   

  	
   

  
	
  ADDENDUM D

  	
   

  
	
  REBATE/DISCLOSURE
  REQUIREMENTS

  	
  60

  
	
   

  	
   

  
	
  ADDENDUM E

  	
   

  
	
  ADDITIONAL
  SERVICE REQUIREMENTS AND STANDARDS

  	
  61

  
	
   

  	
   

  
	
  ADDENDUM F

  	
   

  
	
  PERFORMANCE
  GUARANTEES

  	
  67

  
	
   

  	
   

  
	
  ADDENDUM G

  	
   

  
	
  MEDICARE
  ATTESTATION

  	
  71

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