Document:

Exhibit 10.110

 

 

AMENDMENT NUMBER ONE TO

PACIFICARE OF CALIFORNIA MEDICAL GROUP/IPA SERVICE AGREEMENT

(PROFESSIONAL CAPITATION)

 

The undersigned parties to the
PacifiCare IPA Medicare Services Agreement dated June 1, 1999 (the “Agreement”)
by and between PacifiCare of California (“PacifiCare”) and Professional Care
IPA Medical Group, (“IPA”) do hereby amend the Agreement as set forth
herein.  Except as otherwise
specifically provided, terms utilized herein shall have the meanings set forth
in the Agreement.  Except as
specifically amended herein, the Agreement shall remain unchanged and in full
effect.

 

1.                                       Product Attachment C, Article 3, Paragraph
3.1.2., ADJUSTMENT FOR ADDITIONAL SERVICES is added to read as follows:

 

3.1.2 ADJUSTMENT FOR ADDITIONAL SERVICES.  In addition to Capitation Payments, “
IPA”, shall receive an adjustment for providing or arranging the following
Covered Services for Secure Horizons Members:

 

Vision - *** Per Secure
Horizons Member per month.  

 

Such Covered Services are
further discussed in the Provider Manual.

 

The
effective date of this Amendment is June 1, 1999.  The amendment will terminate effective September 30, 1999.

 

By
signing below, both parties hereto have executed and agreed to this Amendment.

 

 

	
  PacifiCare
  of California

  	
  Professional
  Care IPA Medical Group

  
	
   

  	
   

  
	
  By: 

  	
  /s/ Brian Jeffrey

  	
   

  	
  By:

  	
  /s/ Ed Rotan

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Brian Jeffrey

  	
  Ed Rotan

  
	
  Vice President Network
  Management

  	
  President

  
	
   

  	
   

  
	
   

  	
   

  
	
  Date:

  	
  8/17/01

  	
  Date: 3-29-01

  
							

 

*** Confidential Information
omitted and filed separately with the Securities and Exchange Commission.Exhibit 10.111

 

 

AMENDMENT NUMBER 1 TO

Professional Capitation Medical Group/IPA Services Agreement

 

This Amendment Number 1 to
Professional Capitation Medical Group/IPA Services Agreement (the “Amendment”)
is entered into effective as of January 1, 2002 by and between PACIFICARE OF
CALIFORNIA, a California corporation (“PacifiCare”), and Professional Care IPA
Medical Group (“Medical Group”), with respect to the following facts:

 

The parties have previously
entered into that certain Professional Capitation Medical Group/IPA Services
Agreement dated June 1, 1999 (the “Agreement”) and any prior notices of
termination or non-renewal are hereby cancelled.

 

Definitions utilized in this
Amendment shall have the same meaning set forth in the Agreement.  Except as specifically amended by this
Amendment, the Agreement shall continue in full force and effect.

 

NOW, THEREFORE, in
consideration of the foregoing, the parties hereto agree as follows:

 

1.                                       Section
1.33,  Utilization Management (“UM”)
Program, is hereby amended in its entirety, to read as follows:

 

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

 

2.                                       Section
1.34,  Referral Services, is
hereby added, to read as follows:

 

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

 

3.                                       Section
2.5,  First Paragraph only, Acceptance
and Transfer of Members, is hereby amended in its entirety, to read as
follows:

 

2.5                       Acceptance and Transfer of
Members.  Medical Group and its
Participating Providers may not impose any limitations on the acceptance of
Members for care or treatment that are not imposed on other patients.  PacifiCare, Medical Group and its
Participating Providers shall not request, demand, require or seek directly or
indirectly the transfer, discharge

 

 

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

 

 

1

 

or removal of any Member for reasons of Member’s need for, or
utilization of, Covered Services, except in accordance with the procedures
established by PacifiCare for such action. 
Medical Group and its Participating Providers shall not refuse or fail
to provide or arrange Covered Services to any Member.  In the event of a transfer of Members to Medical Group,
PacifiCare shall retain financial responsibility for some services, described
and attached to this Agreement as Exhibit 5.

 

4.                                       Section
2.6,  Medical Records, is hereby
amended in its entirety, to read as follows:

 

2.6                       Medical Records.  Medical group and its Participating
Providers shall maintain all patient medical records relating to Covered
Services provided to Members, in such form and containing such information as
required by the QI Program, Accreditation Organizations and State and Federal
Law.  Medical records shall be
maintained in a manner that is current, detailed, organized and permits
effective patient care and quality review by Medical Group and PacifiCare
pursuant to the QI Program.  Medical
Records shall be maintained in a form and physical location which is accessible
to Medical Group’s Participating Providers, PacifiCare, Government Agencies and
Accreditation Organizations.  Upon
request and within the time frame requested, Medical Group and its
Participating Providers shall provide to PacifiCare, at Medical Group’s or
Participating Provider’s expense, copies of Member medical records for the
purposes of conducting quality assurance, case management and utilization
reviews, credentialing and peer review, claims processing, verification and
payment, resolving Member grievances and appeals and other activities
reasonably necessary for the proper administration of the Managed Care Plans
consistent with State and Federal Law. 
Medical Group or its Participating Providers shall use best efforts to
provide such medical records.  In the
event that the Medical Group cannot obtain such records, Medical Group and its
Participating Providers shall allow PacifiCare immediate access to such medical
records for onsite copying and shall share the copying expense with
PacifiCare.  Medical Group and its
Participating Providers shall maintain the confidentiality of all Member
medical records and treatment information in accordance with State and Federal
Law.  Medical records shall be retained
by Medical Group and its Participating Providers for at least six (6) years
following the provision of Covered Services and as required by State and
Federal Law.  The provisions of this
Section shall survive the termination of this Agreement for the period of time
required by State and Federal Law.

 

2

 

5.                                       Section
2.8.2.  Letter of Credit, is
hereby deleted in its entirety, and replaced with the following

 

2.8.2              Letter of Credit.

 

(a)  As a material condition to
PacifiCare’s obligations pursuant to this Agreement,  Medical Group shall, upon the occurrence of a Triggering Event as
defined below, obtain for the benefit of PacifiCare a Letter of Credit to
secure Medical Group’s performance under this Agreement (“Letter of Credit”).

 

(b)  The Letter of Credit shall
be in the minimum amount of ***, which amount shall be adjusted by increasing
the face amount of the Letter of Credit (an “Adjusted Letter of Credit”) as
reasonably determined by PacifiCare from time to time throughout the term of
this Agreement (but not more often than semi-annually) to reflect changes in
membership and non-contracted claims payment experience, (the “Letter of Credit
Funding Amount”).  PacifiCare shall
provide Medical Group with thirty (30) days written notice of any requirement
to adjust the Letter of Credit Funding Amount. As used in the balance of this
Section, “Letter of Credit” shall refer to any initial Letter of Credit and any
subsequent Adjusted Letter of Credit.

 

(c)  Immediately upon the
occurrence of a Triggering Event (as defined in this subsection), Medical Group
shall obtain the Letter of Credit in the amount of the then applicable Letter
of Credit Funding Amount.  A Triggering
Event, for purposes of this Section 2.8.1, shall mean any of the
following:  (a) Medical Group’s failure
to comply with its reporting obligations under Title 28, Section 1300.75.4.2
(the “Financial Solvency Regulations”); or (b) Medical Group’s failure after
two consecutive quarters to comply with the standards set forth in the
Financial Solvency Regulations, limited to failure to maintain positive Tangible
Net Equity (TNE), as defined in the Financial Solvency Regulations or failure
to maintain a positive level of working capital, calculated in a manner
consistent with generally accepted accounting principles as contemplated by the
Financial Solvency Regulations.

 

(d)  All the terms and
conditions of the Letter of Credit shall be subject to PacifiCare’s prior
written approval.  Medical Group shall
be responsible for any cost, expense, or administrative fee in connection with
the establishment and maintenance of the Letter of Credit.  Without limiting the foregoing, the Letter
of Credit shall provide that PacifiCare may draw on the Letter of Credit by
certifying to the issuer of the Letter of Credit (the “Issuer”) that (1)
Medical Group is in default under this Agreement, and has failed to cure such
default following thirty (30) days written notice from PacifiCare; or
(2)

 

3

 

Medical Group is Insolvent; or (3) PacifiCare has not received
notice from the Issuer of the Letter of Credit that the Letter of Credit is
being renewed for the period required by this Agreement.

 

(e)  The Letter of Credit, when
required to be in place as provided above, shall remain in full force and
effect throughout the entire Term of this Agreement and until Medical Group
satisfies all its financial obligations, as set forth at Section 2.8.2 (c),
under this Agreement (“the Letter of Credit Term”) including meeting the
standards set forth in the Financial Solvency Regulations.  The Letter of Credit shall be for a minimum
of a six (6) month term.  PacifiCare
acknowledges and agrees that the Letter of Credit may not be issued at any one
time that would be for the entire Letter of Credit Term on the condition that
Medical Group agree to the following. 
Should the Issuer fail to provide notice to PacifiCare at least thirty
(30) days prior to the expiration of the Letter of Credit that the Issuer will
be renewing the Letter of Credit for at least a six (6) month period or should
Medical Group otherwise fail to obtain a replacement Letter of Credit for the
Letter of Credit Term from an issuer acceptable to PacifiCare by a date
fourteen (14) days prior to the expiration date of the Letter of Credit, such
failure shall constitute a material breach of this Agreement and PacifiCare
shall be entitled to draw the entire amount of the Letter of Credit and hold
such funds as a security deposit to pay Medical Group’s obligations under this
Agreement.  The proceeds of the Letter
of Credit (the “Security Deposit”) shall be the property of PacifiCare.  PacifiCare shall use the Security Deposit
solely to pay Medical Group’s obligations under the Agreement.  PacifiCare shall pay Medical Group the
amount of any unused portion of the Security Deposit after all of Medical
Group’s financial obligations have been satisfied and this Agreement has been
terminated.

 

(f)  Upon the occurrence of a
Triggering Event, until such time as Medical Group establishes the Letter of
Credit required by this Section, PacifiCare shall begin deducting ten percent
(10%) of Medical Group’s monthly Capitation Payment for the purpose of
establishing a security deposit (also a “Security Deposit” hereunder) equal to
the Letter of Credit Funding Amount.  The
Security Deposit shall be the property of PacifiCare.  PacifiCare shall pay Medical Group the Security Deposit upon the
earlier of (i) PacifiCare’s receipt of the fully-funded Letter of Credit, or
(ii) all of Medical Group’s financial obligations, as set forth at Section
2.8.2 (c), have been satisfied and this Agreement has been terminated.

 

6.                                 Section 2.10.  Medical Group’s Failure to Comply with
Agreement, Provider Manual or Managed Care Plans.

 

4

 

2.10                 Medical Group’s Failure to Comply
with Agreement, Provider Manual or Managed Care Plans.  If Medical Group fails to comply with any
provision(s) of this Agreement, the Provider Manual or the Managed Care Plans,
PacifiCare will provide written notice of such failure to Medical Group,
specifying a date at least thirty (30) days following the date of the notice by
which Medical Group must be in compliance with such provision(s), as reasonably
determined by PacifiCare.  If Medical
Group fails to comply with such provision(s) by the date specified in the
notice, PacifiCare shall have the right to cease marketing efforts on behalf of
Medical Group and/or discontinue assignment of Members to Medical Group until
such time as Medical Group complies with such provision(s), as reasonably
determined by PacifiCare.  In addition,
PacifiCare shall have the right to either (i) collect from Medical Group or
(ii) recoup against amounts due Medical Group under this Agreement, any
penalties or other monetary amounts payable by PacifiCare to Government
Agencies, Subscriber Groups, Participating Providers or any other health care
providers as a result of Medical Group’s failure to comply with any
provision(s) of this Agreement, the Provider Manual or Managed Care Plans.  Any dispute as to the Medical Group’s
failure to comply per this Section 2.10 shall be resolved pursuant to the
Dispute Resolution Procedures set forth at Section 7.5 (Dispute Resolution
Procedures) of this Agreement and, as set forth at Section 7.5.1, the Medical
Group shall have the right to begin any Dispute Resolution Procedure with the
Confidential Independent Review set forth at Section 7.5.2, regardless of
whether Medical Group or PacifiCare initiates the Dispute Resolution
Procedures.  If Medical Group cures such
non-compliance by the date specified in the notice, then PacifiCare shall not
take any of the actions set forth in this Section 2.10.  PacifiCare’s rights and remedies under this
Section shall be in addition to all other rights and remedies available to
PacifiCare to enforce this Agreement, including the right of termination.

 

7.                                       Section
2.13.  PacifiCare Rights in the Event
of Insolvency of Medical Group, paragraph (i) shall be amended to read as
follows:

 

(i)                            Upon PacifiCare’s decision
to increase withholds for the payment of claims as provided pursuant to Section
5.3 of this Agreement, PacifiCare shall share the withhold calculation
methodology with the Medical Group;

 

8.                                       Section
2.14,  Provide Referral Services,
is hereby added, to read as follows:

 

2.14                 Provide Referral Services.  With the prior approval of PacifiCare
(except in the case of Emergency Services), Medical Group shall arrange any
necessary Referral Services to PacifiCare’s selection of Participating
Providers for Medical Group Members (which shall be shown on the PacifiCare list
of providers of Referral Services).

 

5

 

9.                                       Section
2.15,  Transplant Services, is
hereby added, to read as follows:

 

2.15                 Transplant Services.  Medical Group acknowledges and agrees that,
at PacifiCare’s direction, transplant services shall be provided by
PacifiCare’s National Preferred Transplant Network Providers, in accordance
with PacifiCare’s policies and procedures. 
PacifiCare shall use best efforts to direct transplant services to
facilities which Medical Group has professional service contracts.  Medical Group shall make best efforts to put
in place professional service contracts with PacifiCare’s National Preferred
Transplant Network Providers.

 

10.                         Section 3.1.  Administration and Provision of Data,
is hereby amended in its entirety, to read as follows:

 

3.1                       Administration and Provision
of Data.  PacifiCare shall perform
administrative, accounting, enrollment, eligibility verification and other
functions necessary for the administration and operation of the Managed Care
Plans.  PacifiCare shall provide Medical
Group with management information and data reasonably necessary to carry out
the terms and conditions of this Agreement and for the operation of the Managed
Care Plans.  PacifiCare will provide
such data in an electronic format if required by state or federal law.

 

11.                                 Section
5.3,  Withhold to Pay Claims, is
hereby amended in its entirety, to read as follows

 

5.3                       Withhold to Pay Claims.  If PacifiCare does not delegate performance
of claims processing to Medical Group or if the delegation of claims processing
is revoked by PacifiCare, PacifiCare shall deduct from Medical Group’s monthly
Capitation Payments an amount reasonably estimated by PacifiCare, at the time
of the deduction, to be necessary for PacifiCare to process and pay claims for
Medical Group Services which are not provided directly by Medical Group and its
employed Participating Providers. 
PacifiCare agrees that it shall provide evidence to Medical Group to
support the amount of the withhold, PacifiCare shall consider in good faith
information provided to it by Medical Group in the determination of any
withholds pursuant to this Section and any disputes pursuant to this Section
5.3 shall be resolved pursuant to the Dispute Resolution Procedures set forth
at Section 7.5 (Dispute Resolution Procedures) of this Agreement and, as set
forth at Section 7.5.1, the Medical Group shall have the right to begin any
Dispute Resolution Procedure with the Confidential Independent Review set forth
at Section 7,5.2, regardless of whether Medical Group or PacifiCare initiates
the Dispute Resolution Procedures.

 

6

 

12.                                Section 5.4.1,  Incentive Program Withhold, is hereby amended in its
entirety,  to read as follows

 

5.4.1              Commercial Incentive Program Withhold. 
PacifiCare shall establish a single withhold from Medical Group’s
monthly Commercial Capitation Payment for purposes of offsetting potential
deficits for the Commercial Hospital Incentive Program (CHIP).  For the first Quarter of 2002 the monthly
incentive withhold shall be ***
of Medical Group Capitation Payment for each Managed Care Plan.  PacifiCare shall prospectively adjust the
withhold based on Medical Group’s acute, authorized, non Out of Area, inpatient
bed day per thousand Commercial members per year (days/1000) experience under
the CHIP.  Withholds may be established
as follows:

 

(i)                            Days/1,000 between 179 and 200 – PacifiCare
shall establish a withhold of *** of Medical Group’s monthly Capitation Payment

 

(ii)                         Days/1,000 over 200 – PacifiCare shall
establish a withhold of *** of Medical Group’s monthly Capitation Payment

 

Days/1000
shall be calculated using PacifiCare data, a rolling twelve (12) month average,
for the period ending three (3) months prior to the quarter.  Beginning at the end of the 1st
quarter, 2002.  For example; on April 1st,
PacifiCare shall produce bed day reports which show the Days/1000 performance
of Medical Group, from January 1, 2001 through December 31, 2001.  Withholds may be adjusted up or down, based
on bed day performance, no more frequently than monthly.

 

13.                                 Section
5.4.2,  Secure Horizons Incentive
Program Withhold, is hereby added, to read as follows:

 

5.4.2              Secure Horizons Incentive Program Withhold.  PacifiCare
shall establish a single withhold from Medical Group’s monthly Secure Horizons
Capitation Payment for purposes of offsetting potential deficits for the Secure
Horizons Hospital Incentive Program (SHIP). 
For the first Quarter of 2002 the monthly incentive withhold shall be
*** of Medical Group Capitation Payment for each Managed Care Plan.  PacifiCare shall prospectively adjust the
withhold based on Medical Group’s acute, authorized, non Out of Area, inpatient
bed day per thousand Commercial members per year (days/1000) experience under
the SHIP.  Withholds may be established
as follows:

 

(i)                            Days/1,000 between 1,401 and 1,470 –
PacifiCare shall establish a withhold *** of Medical Group’s monthly Capitation
Payment

 

(ii)                         Days/1,000 over 1,470 – PacifiCare shall
establish a withhold

 

7

 

of *** of Medical Group’s monthly Capitation
Payment

 

Days/1000 shall be calculated using PacifiCare data, a rolling twelve
(12) month average, for the period ending three (3) months prior to the
quarter.  Beginning at the end of the 1st
quarter, 2002.  For example; on April 1st,
PacifiCare shall produce bed day reports which show the days/1000 performance
of Medical Group, from January 1, 2001 through December 31, 2001.  Withholds may be adjusted up or down, based
on bed day performance, no more frequently than monthly.

 

14.                                 Section
5.11,  Recoupment Rights, is
hereby amended in its entirety, to read as follows:

 

5.11                 Recoupment Rights.  PacifiCare shall provide Medical Group with
prior written notice of any proposed offset (i.e., recoupment) from
PacifiCare’s payments to Medical Group, which notice shall contain supporting
relevant documentation for such proposed offset (“Notice of Proposed Offset”).  Medical Group shall review the proposed
offset and advise PacifiCare in writing within thirty (30) days of Medical
Group’s receipt of the Notice of Proposed Offset if Medical Group objects to
the proposed offset, which objection must be reasonable and supported, as
appropriate, by all relevant documentation. 
If (a) PacifiCare does not receive Medical Group’s approval to the
proposed offset or if Medical Group objects to the proposed offset, and (b)
PacifiCare continues to take the position that it is entitled to the offset, either
party may submit such dispute for resolution pursuant to the Dispute Resolution
Procedures set forth in Section 7.5 (Dispute Resolution Procedures) of this
Agreement and, as set forth at Section 7.5.1, the Medical Group shall have the
right to begin any Dispute Resolution Procedure with the Confidential
Independent Review set forth at Section 7.5.2, regardless of whether Medical
Group or PacifiCare initiates the Dispute Resolution Procedures.  While any PacifiCare Provider Dispute
Resolution Procedure pursuant to Section 7.5.1 or Confidential Independent
Review pursuant to Section 7.5.2 of this Agreement is pending, PacifiCare shall
not deduct the amounts to be offset from Medical Group’s Capitation
Payments.  As a material condition to
PacifiCare’s obligations under this Agreement, Medical Group agrees that all
recoupment and any offset rights pursuant to this Agreement shall be deemed to
be and to constitute rights of recoupment authorized in State or Federal law or
in equity to the maximum extent possible under law or in equity.

 

15.                                 Section
6.2.3,  Notice of Termination and
Effective Date of Termination, is hereby amended, to delete the last
sentence of the Section.  The last
sentence of this Section is replaced with the following:

 

8

 

“During the Cure Period, PacifiCare may cease marketing efforts for
Medical Group and discontinue enrollment of Members with Medical Group.”

 

16.                                 Section
7.3,  Member Appeals and Grievances,
is hereby amended as follows.  The
following is added to Section 7.3:

 

7.3                       Member Appeals and Grievances.  PacifiCare shall be responsible for
resolving Member claims for benefits under the Managed Care Plans and all other
claims against PacifiCare.  PacifiCare
shall resolve such claims utilizing the Member Appeals and Grievance Procedures
set forth in the Subscriber Agreement and the Provider Manual.  Medical Group shall assist PacifiCare in the
handling of Member complaints, grievances and appeals, consistent with the
Member Appeals and Grievance Procedures. 
In the event an oral or written complaint, grievance or appeal is
presented to Medical Group or any of its Participating Providers relating to
benefits or coverage under a Managed Care Plan, Medical Group or its
Participating Providers will immediately refer Members to contact PacifiCare or
deliver any written complaint, grievance or appeal to PacifiCare for handling
pursuant to the Member Appeals and Grievance Procedures.  Medical Group and its Participating
Providers shall comply with all final determinations made by PacifiCare through
the Member Appeals and Grievance Procedures as they relate to Medical Group
Services.  PacifiCare agrees that it
shall utilize Medical Group’s Participating Providers when available to provide
any care related to a determination, unless otherwise directed by a government
agency.  Member claims against Medical
Group or its Participating Providers, other than claims for benefits under the
Managed Care Plans, are not subject to the Member Appeals and Grievance
Procedures and are not governed by this Agreement.

 

17.                                 Section
7.5,  Disputes Between PacifiCare and
Medical Group, is hereby amended in its entirety as follows

 

7.5                       Dispute Resolution Procedures

 

7.5.1               PacifiCare’s Provider Dispute
Resolution Procedure. 
Notwithstanding any provision in this Agreement to the contrary, Medical
Group and PacifiCare agree that disputes arising out of the performance of this
Agreement or relating to the decisions made by PacifiCare under this Agreement
(“Disputes”) shall be resolved by a process beginning with the independent
review procedure (“Confidential Independent Review”) set forth in Section 7.5.2
of this Agreement unless Medical Group, specifically notifies PacifiCare in
writing (“Notice”) that the Dispute shall be resolved pursuant to the dispute
resolution procedure (“PacifiCare Provider Dispute

 

9

 

Resolution Procedure”) set forth in Exhibit 4 to this Agreement in lieu
of the Confidential Independent Review. 
If the Dispute proceeds to arbitration pursuant to Section 7.5.3 of this
Agreement, the arbitration shall be a de novo proceeding which shall be
convened without any recommendations made pursuant to Sections 7.5.1 or 7.5.2
of this Agreement.

 

7.5.2               Confidential Independent Review

 

a.                             When a Dispute arises
between the parties, either party may initiate the Confidential Independent
Review of the Dispute by delivering a written demand to the other party for the
initiation of Confidential Independent Review (“Demand for IR”).  The Demand for IR shall include a detailed
description of the Dispute and the name of one (1) or more proposed individuals
(“Independent Reviewers”) to review and resolve such Dispute who meet the IR Qualifications
set forth in subsection b. of this Section 7.5.2 of this Agreement.  The party receiving the Demand for IR shall
respond to the Demand for IR within five (5) calendar days of the date of
delivery of such Demand for IR (“Demand Delivery Date”), which response shall
either accept one (1) of the proposed Independent Reviewers named on the Demand
for IR or propose one (1) or more alternative Independent Reviewers, each of
whom meet the IR Qualifications.  If the
party initiating the Demand for IR does not accept an alternative Independent
Reviewer, within ten (10) calendar days of the Demand Delivery Date, within
fifteen (15) calendar days of the Demand Delivery Date, the Independent
Reviewers selected by each party shall select the Independent Reviewer no later
than thirty (30) calendar days following the Demand Delivery Date.

 

b.                            The IR Qualifications are
as follows:

 

(i)                            For clinical Disputes, the
Independent Reviewer shall be a physician licensed to practice medicine in
California.

 

(ii)                         For Disputes that do not
involve clinical issues, the Independent Reviewer shall be an individual with
expertise in health care finance.

 

(iii)                      The Independent Reviewer shall not
be an employee, an officer or a director of either party.

 

10

 

(iv)                     The Independent Reviewer shall sign an agreement
with both parties pursuant to which the Independent Reviewer agrees to maintain
the Dispute as confidential.

 

c.                             The Independent Reviewer
shall, unless otherwise agreed to by the parties, render and deliver a written
decision regarding the Dispute to the parties within forty-five (45) calendar
days following the Demand Delivery Date. 
The parties shall be entitled to present the Independent Reviewer with
any written materials determined by the applicable party to be useful in
resolving the Dispute and/or presenting their position on the Dispute and each
party shall provide a copy of all materials presented to the Independent
Reviewer to the other party.  Any verbal
information provided to the Independent Reviewer shall, to the extent possible,
be provided to all parties participating in the communication.  If the Independent Reviewer has questions or
seeks additional information, the Independent Reviewer shall make the request to
both parties and the parties’ responses shall be promptly provided to the
Independent Reviewer, with copies to the other party.  Each party shall pay its own costs and expenses relating to the
Confidential Independent Review; provided, however, that the costs and expenses
of the Independent Reviewer shall be shared equally by the parties.

 

d.                            Either party may appeal the
decision of the Independent Reviewer within twenty (20) calendar days of the
date such decision is delivered to the parties by requesting arbitration
pursuant to Section 7.5.3 of this Agreement.

 

e.                             Notwithstanding any
provision in this Agreement to the contrary, while any Confidential Independent
Review pursuant to Section 7.5.2 of this Agreement or the PacifiCare Provider
Dispute Resolution Procedure in Section 7.5.1 is being sought or is otherwise
proceeding: 1) Members shall not be denied services deemed by PacifiCare or its
designee to be Covered Services; and 2) PacifiCare shall not assess any penalty
or implement any withhold or deduction from Capitation Payments or other payments
deemed by PacifiCare to be due from PacifiCare to Medical Group.

 

11

 

7.5.3               Arbitration.  Any controversy, dispute or claim arising
out of the interpretation, performance or breach of this Agreement which is not
resolved pursuant to the PacifiCare Provider Dispute Resolution Procedure or
the Confidential Independent Review specified above shall be resolved by
binding arbitration at the request of either party, in accordance with and
administered by either (a) the Commercial Rules of the American Arbitration
Association or (b) the Comprehensive Arbitration Rules of Practice and
Procedure of the Judicial Arbitration Mediation Services, Inc.  (“JAMS”) as shall be mutually determined by
the parties, but if the parties cannot agree, the arbitration shall be
conducted by JAMS.  Such arbitration
shall occur in Los Angeles, California, unless the parties mutually agree to
have such proceeding in some other locale. 
The arbitrator(s) shall apply California substantive law, or federal
substantive law where state law is preempted. 
Civil discovery for use in such arbitration may be conducted in
accordance with the provisions of California law that would apply if the matter
were being litigated in a Superior Court of the State of California.  The arbitrator(s) selected shall have the
power to enforce the rights, remedies, duties, liabilities and obligations of
discovery by the imposition of the same terms, conditions and penalties as can
be imposed in like circumstances in a civil action by a court of competent
jurisdiction of the State of California. 
The provisions of California law governing discovery in a civil action
filed in Superior Court of the State of California (including, but not limited
to, deposition) are incorporated herein by reference and made applicable to
this Agreement.

 

The arbitrator(s) shall have the power to grant all legal and equitable
remedies provided by California law and award compensatory damages provided by
California law, except that punitive damages shall not be awarded.  The arbitrator(s) shall prepare in writing
and provide to the parties an award including factual findings and the legal
reasons on which the award is based. 
The arbitrator(s) shall not have the power to commit errors of law or
legal reasoning.  Any judicial review of
the arbitrator(s) decision shall be governed by California Code of Civil
Procedure Section 1285, et seq., except
that the parties expressly grant the Superior Court the authority to correct
errors of law, and modify the arbitrator(s)’ ruling to avoid errors of law.

 

If the arbitrator(s) finds that the nonprevailing party’s position was
without legal or factual merit, the arbitrator(s) shall have the discretion to
award the substantially prevailing party its

 

12

 

attorneys’ fees and costs incurred in connection with the arbitration
hereunder.  which fees and costs shall
be paid by the nonprevailing party.

 

Notwithstanding the above, in the event either Medical Group or
PacifiCare wishes to obtain injunctive relief or a temporary restraining order,
such party may initiate an action for such relief in a court of general
jurisdiction in the State of California. 
The decision of the court with respect to the requested injunctive
relief or temporary restraining order shall be subject to appeal only as
allowed under California law.  However,
the courts shall not have the authority to review or grant any request or
demand for damages.

 

18.                                 Section
7.11,  Notification and Approval of
Sale or Change in Management of Medical Group, is hereby amended in its
entirety as follows:

 

7.11                 Notification and Approval of Sale
or Change in Management of Medical Group. 
Medical Group agrees that it shall provide prior written notice to
PacifiCare of its intent to either (i) sell, transfer or convey its business or
any substantial portion of its business assets to another entity (“successor
entity”) or (ii) enter into a management contract with a physician practice
management company (“management company”) which does not manage Medical Group
as of the Commencement Date.  Such prior
written notice shall be given at least ninety (90) days prior to Medical Group
selling its business or entering into such contract.  As set forth in Section 6.4, PacifiCare shall have the right to
terminate this Agreement upon ninety (90) days written notice to Medical Group
if PacifiCare reasonably determines that any successor entity or any management
company cannot satisfactorily perform the obligations of Medical group under
this Agreement.  Medical Group warrants
and assures that this Agreement, if not otherwise terminated by PacifiCare,
will be assumed by all successor entities and that all successor entities and
management companies will be bound by the terms and conditions of this
Agreement.

 

19.                                 Section 8.3.5.  Services to be Provided to Members
Transferred to Medical Group from a Terminated Participating Provider, is
hereby amended in its entirety, to read as follows:

 

8.3.5              Services to be Provided to Members
Transferred to Medical Group from a Terminated Participating Provider.  Subject to Medical Group’s capacity to
accept additional Members as set forth in Section 2.5 of this Agreement,
Medical Group agrees to accept transfers of Members from other Participating
Providers in circumstances in which such Participating Provider’s agreement
with PacifiCare has terminated. 
PacifiCare agrees to accept financial responsibility for certain Covered

 

13

 

Services, as described in Exhibit 5. 
Upon such transfer, Medical Group agrees that its shall accept prior
authorizations for Covered Services provided to such Members and shall be
financially responsible for all continuing Covered Services (except those
described in Exhibit 5) to be provided or arranged for such transferred Members
following termination of the other Participating Provider’s agreement with
PacifiCare.  Notwithstanding the
foregoing, in the event that the prior authorizations related to such transfer
result in a material adverse economic effect on Medical Group as reasonably
demonstrated by Medical Group, PacifiCare and Medical Group agree to meet in
good faith to discuss how to address the economic effect on Medical Group.  Any dispute as to the Medical Group’s
acceptance of members and prior authorizations per this Section 8.3.5 shall be
resolved pursuant to the Dispute Resolution Procedures set forth at Section 7.5
(Dispute Resolution Procedures) of this Agreement and, as set forth at Section
7.5.1, the Medical Group shall have the right to begin any Dispute Resolution
Procedure with the Confidential Independent Review set forth at Section
7.5.2.  regardless of whether Medical
Group or PacifiCare initiates the Dispute Resolution Procedures.

 

20.                                 Section
8.6,  Equal Opportunity / Affirmative
Action, is hereby added, to read as
follows:

 

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

 

21.                                 Article 9, Express Referrals, is
hereby deleted in its entirety.

 

22.                                 Exhibit 1.  Medical Group Facilities and Service Area,
is hereby amended to read as follows:

 

Medical Group Service Area: The Medical Group
Service Area is the geographic area within a thirty (30) mile radius of each of
the Primary Care Physician’s offices. 
The Medical Group Service Area shall be determined by PacifiCare based
upon the shortest route using public streets and highways.

 

23.                                 Exhibit 4, PacifiCare
Dispute Resolution Procedure, is hereby attached as an integral part of
this Agreement.

 

14

 

24.                                 Exhibit 5, PacifiCare obligations in the
event PacifiCare block transfers members to Medical Group from another
PacifiCare contracted medical group. 
is hereby attached has an integral part of this Agreement.

 

25.                                 Product Attachment A, Commercial, Section 1.1,
Commercial Plan Premium, is hereby deleted in its entirety.

 

26.                                 Product Attachment A.  Commercial, Section 3.1, Capitation
Payments for Commercial Plan Members, will be changed from ***  to Age/Gender/Benefit Adjusted Capitation
Payments, and is hereby amended in its entirety, to read as follows:

 

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

 

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

 

	
  Age Sex

  Category

  	
   

  	
  Age/Sex

  Factor

  	
   

  
	
  Child 0

  	
   

  	
  1.9939

  	
   

  
	
  Child 1

  	
   

  	
  1.2664

  	
   

  
	
  Child 2-9

  	
   

  	
  0.4730

  	
   

  
	
  Child 10-17

  	
   

  	
  0.4375

  	
   

  
	
  Female 18-19

  	
   

  	
  0.7395

  	
   

  
	
  Female 20-24

  	
   

  	
  1.4564

  	
   

  
	
  Female 25-29

  	
   

  	
  1
  6593

  	
   

  
	
  Female 30-34

  	
   

  	
  1.4785

  	
   

  
	
  Female 35-39

  	
   

  	
  1.2495

  	
   

  
	
  Female 40-44

  	
   

  	
  1.3095

  	
   

  
	
  Female 45-49

  	
   

  	
  1.2221

  	
   

  
	
  Female 50-54

  	
   

  	
  1.5869

  	
   

  
	
  Female 55-59

  	
   

  	
  1.7404

  	
   

  
	
  Female 60-64

  	
   

  	
  2.0135

  	
   

  
	
  Female 65 plus

  	
   

  	
  2.0630

  	
   

  
	
  Male 18-19

  	
   

  	
  0.3554

  	
   

  
	
  Male 20-24

  	
   

  	
  0.4774

  	
   

  
	
  Male 25-29

  	
   

  	
  0.5702

  	
   

  
	
  Male 30-34

  	
   

  	
  0.6033

  	
   

  
	
  Male 35-39

  	
   

  	
  0.7038

  	
   

  
	
  Male 40-44

  	
   

  	
  0.7700

  	
   

  
	
  Male 45-49

  	
   

  	
  0.8742

  	
   

  
	
  Male 50-54

  	
   

  	
  1.3235

  	
   

  
	
  Male 55-59

  	
   

  	
  1.7024

  	
   

  
	
  Male 60-64

  	
   

  	
  2.2284

  	
   

  
	
  Male 65 plus

  	
   

  	
  2.3563

  	
   

  

 

15

 

27.                                 Product Attachment A,
Commercial, Section 3.1.3, Adjustment for Experience-Rated Managed Care
Plans, is hereby deleted in its entirety.

 

28.                                 Product Attachment A,
Commercial, Section 3.1.3, Minimum/Maximum Capitation Payment Program,
is hereby added, to read as follows:

 

3.1.1              Minimum/Maximum Capitation Payment
Program.  PacifiCare guarantees that
the Medical Group will receive a minimum age/gender/benefit plan adjusted
Capitation Payment per Commercial Health Plan Member per month, for the
provision of Medical Services.  In
exchange for this minimum guarantee, PacifiCare is also establishing a maximum allowable
Capitation Payment.  The guarantee (the
“Minimum/Maximum Capitation Payment Program”) is described further as follows:

 

For the period January 1, 2002, to March 31, 2002 only, the Medical Group minimum age/gender/benefit
plan adjusted Capitation Payment guarantee shall be *** average per Commercial
Health Plan Member per month and the maximum payment shall be limited to ***
average per Commercial Health Plan Member per month.

 

For the period April 1, 2002, to June 31, 2002 only, the Medical Group
minimum age/gender/benefit plan adjusted Capitation Payment guarantee shall be
*** average per Commercial Health Plan Member per month and the maximum payment
shall be limited to *** average per Commercial Health Plan Member per month.

 

Prior to other adjustments to the Capitation Payments, if the average
Capitation Payment per Member per month received by the Medical Group is less
than the minimum rate listed above, PacifiCare shall pay the Medical Group the
difference as described below, to meet the minimum guarantee of this program.  In addition, if the average Capitation
Payment per Member per month exceeds the maximum rate listed above, the Medical
Group shall owe PacifiCare the difference. 
Any amounts owed by Medical Group shall be recovered by PacifiCare

 

16

 

as described below, to meet the maximum average Capitation Payment
allowed for under the Minimum/Maximum Capitation Payment Program.

 

Calculations of the Minimum/Maximum Capitation Payment Program will be
based on the cumulative calendar quarter average per Member per month amount
for the 2002 calendar year.  PacifiCare
shall provide calculations 45 days after the end of each calendar quarter of
this Agreement.  If PacifiCare owes a  payment to the Medical Group, PacifiCare
will provide payment 30 days after the calculation is provided (i.e. 75 days
after the calendar quarter).  If the
Medical Group owes money to PacifiCare, PacifiCare will deduct such amount from
the capitation of the Medical Group in the month following provision of the calculation
(i.e.  if the calculation is provided on
November 15th, the deduction will be taken from the capitation due
on December 10th).

 

A final year-end settlement will be provided on August 15, 2003, to
capture any final retroactivity for the calendar year 2002.  If PacifiCare owes a payment to the Medical
Group, PacifiCare will provide payment by September 15, 2003, 30 days after the
calculation is provided.  If the Medical
Group owes money to PacifiCare, PacifiCare will deduct such amount from the
capitation of the Medical Group in the month following provision of the
calculation (i.e.  if the calculation is
provided on August 15, the deduction will be taken from the capitation due on
September 10).

 

Example:

 

	
  Calendar
  Yr 2002

  Quarter

  	
   

  	
  Average PMPM

  	
   

  	
  Calculation Due.

  	
   

  	
  Date

  Paid/Recovered

  
	
  Q1

  	
   

  	
  Avg. for Ql

  	
   

  	
  May 15, 2002

  	
   

  	
  June 15 (pd)
  June 10 (recovered)

  
	
  Q2

  	
   

  	
  Avg. for Ql
  - Q2

  	
   

  	
  Aug. 15,
  2002

  	
   

  	
  Sept. 15
  (pd) Sept. 10 (recovered)

  
	
  Q3

  	
   

  	
  Avg. for Ql
  - Q3

  	
   

  	
  Nov. 15,
  2002

  	
   

  	
  Dec. 15(pd)
  Dec. 10 (recovered)

  
	
  Q4

  	
   

  	
  Avg. for Ql
  - Q4

  	
   

  	
  Feb. 5, 2003

  	
   

  	
  March 15
  (pd) March 10 (recovered)

  
	
  2002 Year-end Settlement

  	
   

  	
  Avg. for Ql-Q4, adjusted for retroactivity

  	
   

  	
  Aug. 15,
  2003

  	
   

  	
  Sept. 15, 2003 (pd) Sept. 10, 2003
  (recovered)

  

 

17

 

29.                                 Product Attachment A,
Commercial, Section 3.2 (ii), ISL Premium, is hereby amended in its
entirety, to read as follows;

 

(ii)                        ISL Premium shall be zero
dollars ($0.00) per Commercial Plan Member per month

 

30.                                 Product Attachment
A.  Commercial, Section 3.3.1 (ii), Reinsurance
Premium, is hereby amended in its entirety, to read as follows:

 

(ii)                        Reinsurance Premium shall be *** per
Commercial Plan Member per month.

 

31.                                 Product Attachment A,
Commercial, Section 3.3.2, CHIP Budget, will be changed from *** to *** of
the Commercial Plan Premium per Member per month, excluding Commercial POS Plan
Members, less PacifiCare Commercial Plan Reinsurance Premium, if any, and is
subject to the adjustments set forth in Article 5 of the Base Agreement and the
adjustments further specified below.

 

32.                                 Product Attachment A,
Commercial, Section 3.3.5, CHIP Deficit, is hereby amended in its
entirety, to read as follows:

 

3.3.5              CHIP Deficit.  In the event the CHIP Expense is greater
than the CHIP Budget, the deficit shall be allocated as follows:

 

*** to Medical Group, except that no portion
of the CHIP Deficit shall be allocated to Medical Group if Medical Group’s Bed
Day utilization is less than one hundred and seventy-nine (179) days/1,000.

 

*** to PacifiCare

 

33.                                 Product Attachment A,
Commercial, Section 3.3.6, Settlements and Reconciliation, is hereby
amended in its entirety, to read as follows:

 

3.3.6              Settlements and Reconciliation.  Settlements and reconciliation of the CHIP
shall be performed by PacifiCare as provided in Article 5 of the Base
Agreement.

 

34.                                 Product Attachment B,
Commercial POS, Section 1.7, Commercial Plan Premium, is hereby added,
to read as follows:

 

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

 

18

 

35.                                 Product Attachment B, Commercial POS, Section
3.2.3 (iii), Out-of-Network Reinsurance Premium, is hereby amended in
its entirety, to read as follows:

 

(iii)                     Out-of-Network Reinsurance Premium shall be
*** of the Commercial Plan Reinsurance Premium amount set forth in Section
3.3.1 of Product Attachment A.

 

36.                                 Product Attachment C, Secure Horizons, Section 1.1, HCFA,
is hereby amended in its entirety, to read as follows:

 

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

 

Any
references to the Health Care Financing Administration (“HCFA”) are hereby
replaced with CMS.

 

37                                    Product Attachment C, Secure Horizons,
Section 3.1.  Capitation Payments for
Secure Horizons Members, will be changed from *** of the Secure Horizons
Revenue per Secure Horizons Member per month, to *** of the Secure Horizons
Revenue per Secure Horizons Member per month.

 

38                                    Product Attachment C, Secure Horizons,
Section 3.3.2, SHIP Budget: effective January 1, 2002, will be changed
from *** to *** of the Secure Horizons Revenue per Secure Horizons Member per
Month, subject to the adjustments set forth in Article 5 of the Base Agreement
and further specified below, less PacifiCare Secure Horizons Plan Reinsurance
Premium, if any.

 

39.                                 Product Attachment C, Secure Horizons,
Section 3.3.5, SHIP Deficit, is hereby amended in its entirety, to read
as follows:

 

3.3.5                        SHIP Deficit.  In
the event the SHIP Expense is greater than the SHIP Budget, the deficit shall
be allocated as follows:

 

*** to
Medical Group, except that no portion of the SHIP Deficit shall be allocated to
Medical Group if Medical Group’s Bed Day utilization is less than one thousand,
four hundred and one (1,401) days/1,000.

 

***
PacifiCare

 

40.                                 Product Attachment C, Secure Horizons,
Section 3.3.6, Settlements and Reconciliation, is hereby amended in its
entirety, to read as follows:

 

19

 

3.3.6              Settlements and Reconciliation. 
Settlements and reconciliation of the SHIP shall be performed by
PacifiCare as provided in Article 5 of the Base Agreement.

 

41.                                 Product Attachment C, Secure Horizons,
Section 3.4, Market-Specific Benefit Program, will be changed from ***
to *** and add to it *** per Secure Horizons Plan Member per month, which
amount is established as a credit for rebates received from pharmaceutical
manufacturers.  This credit may or may
not reflect the total pharmaceutical manufacturer rebate revenues received by
PacifiCare for purposes of funding and administering the MSBP

 

Effective
March 1, 2002, the MSBP will be changed from *** back to *** and add to it *** per Secure Horizons Plan Member per month,
which amount is established as a credit for rebates received from
pharmaceutical manufacturers.

 

42.                                 Product Attachment C, Secure Horizons,
Section 3.4.3, MSBP Surplus, is hereby amended in its entirety, to read
as follows:

 

3.4.3              MSBP Surplus.  In
the event the MSBP Expense is less than the MSBP Budget, *** of the surplus
shall be allocated to Medical Group up to *** per Secure Horizons Member per
month.

 

43.                                 Product Attachment C,
Secure Horizons, Section 3.4.4, MSBP
Deficit, is hereby amended in its entirety, to read as follows:

 

3.4.4              MSBP Deficit. In the event the MSBP Expense is greater
than the MSBP Budget, *** of the deficit shall be allocated to Medical Group up
to *** per Secure Horizons Member per month.

 

20

 

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

 

	
   

  	
  PACIFICARE
  OF CALIFORNIA

  A California corporation

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Brian
  Jeffrey

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  	
  /s/ Brian
  Jeffrey

  	
   

  
	
   

  	
   

  
	
   

  	
  Title

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Professional
  Care IPA Medical Group

  A California professional corporation

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  Richard
  Shinto

  	
   

  
	
   

  	
   

  
	
   

  	
  Name: 

  	
  Richard
  Shinto

  	
   

  
	
   

  	
   

  
	
   

  	
  Title: 

  	
  Medical
  Director

  	
   

  
							

 

 

21

 

EXHIBIT 4

PACIFICARE DISPUTE RESOLUTION PROCEDURE

 

(This Exhibit 4 is an integral part of this Agreement)

 

	
  Provider
  Dispute

  Resolution Process

  

  Scope

  	
   

  	
  PacifiCare
  has developed a standard dispute resolution procedure to ensure the timely
  response and resolution of provider disputes through a process that includes
  documentation, investigation, notification and timely resolution.  The Provider Dispute Resolution Procedure
  is not intended to provide a mechanism for renegotiating the terms of the
  provider agreement.  It is a mechanism
  by which contracting providers may submit disputes arising out of the
  performance of the provider agreement or relating to decisions made by
  PacifiCare pursuant to the provider agreement.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  A dispute
  can be an oral or written expression of dissatisfaction by a provider, a
  request for reconsideration of a decision to deny services or payment of
  services (i.e., a denied claim or service) or an issue of perceived monies
  owed to the provider.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Disputes
  arising from the following would go through the Provider Dispute Resolution
  Procedure:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  •                  Denial of
  payment for services

  •                  Reimbursement/billing
  issues

  •                  Settlement
  issues

  •                  Capitation
  issues (i.e., inaccurate reimbursement)

  •                  Clinical
  issues

  •                  Assignment (or
  transfer) of members

  •                  Disenrollment
  of a member

  •                  Revocation of
  delegation issues

  •                  Provider termination

  •                  Financial risk
  issues

  •                  Other
  contractual related issues (excluding rate negotiation)

  
	
   

  	
   

  	
   

  
	
  Procedure

  	
   

  	
  Submission and Resolution of Disputes

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  PacifiCare
  encourages providers to talk with their PacifiCare Network Management Representative about any questions,
  comments, or concerns they may have. 
  If the Network Management
  Representative does

  

 

22

 

	
   

  	
   

  	
  not resolve
  the issue, the provider can submit a written dispute containing the following
  information:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  •                  Provider Name
  and Address

  •                  Provider’s
  PacifiCare Group or Individual ID#

  •                  A complete and accurate explanation of the problem

  •                  Supporting documentation including copies
  of

  Claims (if applicable), Medical Records,

  reports as necessary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  The provider should send
  the dispute request to:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  PacifiCare of
  California

  Attention:Administrator

  P.O.  Box 6006

  Cypress, CA 90630-5015

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  PacifiCare
  will send a written acknowledgment of receipt of the provider’s request and
  an explanation of the review procedure within five (5) business days.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  There are, four levels of dispute resolution
  available to the provider.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Level 1 – Departmental Review, (as
  appropriate):

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  •                  Claims

  •                  Medical Management

  •                  Quality
  Management

  •                  Finance

  •                  Contracting

  •                  Network
  Management

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Level 2 – Plan Level Executive Committee

  Level 3 – Independent Review

  Level 4 – Arbitration

  
					

 

23

 

	
  Level 1 –

  Departmental Review

  	
   

  	
  The
  Network Management Department will initially review all disputes submitted by

  providers.  If they are not able to resolve the
  dispute, they will forward the dispute to the appropriate PacifiCare
  Department for review.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  •                  If the dispute involves quality of care,
  medical services or any clinically related issue, assignment or disenrollment
  of members, the Plan Medical Director will review the case.

  •                  If the dispute arises out of a denial of a
  claim, a billing or reimbursement issue, the Director of Claims will review
  the case.

  •                  The Controller or Director of Finance will
  review all financial issues.

  •                  The Vice President of Credentialing (or
  Quality Management) will review individual provider termination
  disputes.  The matter will be
  addressed and resolved under separate PacifiCare policies and procedures
  related to physician termination and procedural rights.  (See the “Administrative Rights upon
  Termination of Individual Provider” section below.).

  •                  The Vice President of Network Management
  will review all contract-related issues including delegation issues, provider
  group termination disputes and financial risk issues.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Network Management will
  send a written determination to the provider within sixty (60) calendar days
  of receipt of the original written dispute, (or as expeditiously as the
  situation requires), dependent upon receipt of all pertinent
  information.  This will include the
  resolution of the dispute, the reasons for the decision and the
  decision-maker.

  

 

24

 

	
   

  	
   

  	
  Please note that if the
  dispute involves a service denial that places a member’s health in jeopardy,
  it will be considered as an expedited appeal and handled through the member
  appeals process.  (See “Provider
  Acting on Behalf of Member in an Appeal or Grievance” section below).

  
	
   

  	
   

  	
   

  
	
  Level 2 –

  Executive Committee

  Review

  	
   

  	
  If the provider is
  dissatisfied with the Level I determination, the provider may request a
  review by the Executive
  Committee  of
  PacifiCare by submitting a written request within thirty (30) days of receipt
  of the Level 1 determination to the Network Management Department.  The Network Management Department will
  send a written acknowledgment of receipt of the provider’s request within
  five (5) business days that will also include an explanation of the review
  procedure and notification of the review date.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Providers will be notified
  of their right to appear before the Committee in person to discuss the issue.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  The Executive Committee  will review the provider’s dispute and
  provide a determination within 30 calendar days of the request.

  
	
   

  	
   

  	
   

  
	
  Level 3 –

  Independent Review

  	
   

  	
  If the provider is not
  satisfied with the Level 2  determination,
  he/she may submit the dispute to Independent Review in accordance with the
  terms of the Provider Agreement. Either party may initiate Independent Review
  of the dispute by delivering a written demand to the other party for the
  initiation of Independent Review within thirty (30) days of receipt of the
  Level 2 determination.  The party
  receiving the Demand for IR must respond to the Demand for IR within five (5)
  calendar days of the date of delivery.

  
	
   

  	
   

  	
   

  
	
  Level 4 –

  Arbitration

  	
   

  	
  Either party may appeal the
  decision of the Independent Reviewer within twenty (20) calendar days of the
  date such decision is delivered to the parties by requesting arbitration in
  accordance with the terms of the Provider Agreement.  The Network Management Department will
  send a written acknowledgment of receipt of the provider’s

  

 

25

 

	
   

  	
   

  	
  request for
  arbitration within five (5) business days that will include an explanation of
  the arbitration procedure.

  
	
   

  	
   

  	
   

  
	
  Provider Acting on

  Behalf of Member in

  an Appeal or

  Grievance

  	
   

  	
  The Provider
  Dispute Resolution Process is separate and distinct from the PacifiCare
  Member Appeals and Grievance Procedure. 
  A provider may join with, or assist a PacifiCare member in submitting
  a member appeal or grievance for resolution, or submit the appeal on behalf
  of the member but a provider cannot on providers own behalf appeal a decision
  under the PacifiCare Member Appeals and Grievance Procedure.  Providers wishing to appeal on behalf of a
  member must obtain a written authorization to represent the member.  Non-contracted providers must sign either a written authorization to
  represent the member or a
  waiver of payment form (if filing on their own behalf).  Please see the Member Appeals and
  Grievance Procedure in your PacifiCare
  Policy and Procedure Manual for more details.

  
	
   

  	
   

  	
   

  
	
  Administrative Rights

  upon Termination of

  Individual Provider

  	
   

  	
  The
  termination of individual physicians or other health care professionals is
  handled in accordance with the terms of the physician contract and separate
  policies and procedures established by the PacifiCare Health Services/Quality
  Management/Credentialing Department. 
  These procedures may include certain administrative procedural rights
  or fair hearing rights for the physician, depending on the reason for
  termination, in accordance with state and federal law and regulations or
  standards established by PacifiCare. 
  Should a physician submit a dispute or challenge to PacifiCare
  involving the physician’s termination, the matter will be addressed and
  resolved under the separate PacifiCare policies and procedures related to
  physician termination and procedural rights.

  

 

26

 

EXHIBIT 5

PACIFICARE OBLIGATIONS IN THE EVENT OF BLOCK
TRANSFERS TO

MEDICAL GROUP

 

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

 

1.               PacifiCare will have financial responsibility
for Organ transplants or bone marrow transplants and related services that take
place within 120 days of eligibility.

 

2.               PacifiCare will
have financial responsibility for surgeries already scheduled by the former
medical group /IPA and surgeries scheduled by Medical Group within 30 days
eligibility and within 60 days of eligibility of the provider of service is not
contracted with Medical Group.

 

3.               Professional and facility fees
associated with acute inpatient care for patients hospitalized at the time of
transfer to Medical Group until date of discharge or transfer to a lower level
of care will be financial responsibility of PacifiCare or former medical group.

 

4.               Dialysis services to remain PacifiCare
responsibility if the Member is not able to transfer to an in-network Dialysis
facility.

 

5.               Members undergoing current courses of
chemotherapy or radiation therapy for 90 days if the Member is not transferable
to an in-network provider will be financial responsibility of PacifiCare or
former medical group.

 

6.               Facility and professional fees
associated 3rd trimester pregnancies at the time of transfer to
Medical Group will be the financial responsibility of PacifiCare.

 

27

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