Document:

Exhibit 10.8

Exhibit 10.8

HEALTHSPRING, INC.

NON-QUALIFIED STOCK OPTION AGREEMENT

(Performance Vesting)

THIS NON-QUALIFIED STOCK OPTION AGREEMENT (this “Agreement”) is made and entered into as of
this
 _____ 
day of                     , 20
 _____ 
(the “Grant Date”), by and between HealthSpring, Inc., a
Delaware corporation (together with its Subsidiaries and Affiliates, the “Company”), and
                                         (the “Optionee”). Capitalized terms not otherwise defined herein shall have the
meaning ascribed to such terms in the HealthSpring, Inc. Amended and Restated 2006 Equity Incentive
Plan (the “Plan”).

WHEREAS, the Company has adopted the Plan, which permits the issuance of stock options for the
purchase of shares of the common stock, par value $0.01 per share, of the Company (the “Shares”);
and

WHEREAS, the Company desires to afford the Optionee an opportunity to purchase Shares as
hereinafter provided in accordance with the provisions of the Plan.

NOW, THEREFORE, in consideration of the mutual covenants hereinafter set forth and for other
good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto, intending to be legally bound hereby, agree as follows:

1. Grant of Option.

(a) The Company grants as of the date of this Agreement the right and option (the “Option”) to
purchase                      Shares, in whole or in part (the “Performance Option Stock”), at an exercise
price of                                                              and No/100 Dollars ($           
         ) per Share, on the terms and
conditions set forth in this Agreement and subject to all provisions of the Plan. The Optionee,
holder or beneficiary of the Option shall not have any of the rights of a stockholder with respect
to the Performance Option Stock until such person has become a holder of such shares by the due
exercise of the Option and payment of the Option Payment (as defined in Section 3 below) in
accordance with this Agreement.

(b) The Option shall be a non-qualified stock option. In order to provide the Company with
the opportunity to claim the benefit of any income tax deduction which may be available to it upon
the exercise of the Option, and in order to comply with all applicable federal or state tax laws or
regulations, the Company may take such action as it deems appropriate to ensure that, if necessary,
all applicable federal, state or other taxes are withheld or collected from the Optionee.

(c) For purposes of this Agreement, the “Performance Period” shall mean the two consecutive
fiscal years of the Company beginning with the year in which the Grant Date occurs.

 

 

 

2. Exercise of Option.

(a) Except as provided herein and subject to such other exceptions as may be determined by the
Committee in its discretion:

(i) the number of shares of Performance Option Stock subject to this Option shall be
adjusted following the end of the Performance Period pursuant to the performance criteria
set forth on Exhibit A hereto (such adjusted number of shares of Performance Option
Stock, the “Option Stock”);

(ii) this Option shall become vested and exercisable with respect to fifty percent
(50%) of the Option Stock determined above on the later of (A) the second anniversary of the
Grant Date, or (B) the date on which the Committee determines the number of shares of Option
Stock as provided in (i) above, if and only if the Optionee shall have been continuously
employed by the Company from the date of this Agreement through and including such dates,
and

(iii) with respect to an additional twenty-five percent (25%) of the Option Stock
determined above on each of the third and fourth anniversaries of the Grant Date if and only
if the Optionee shall have been continuously employed by the Company from the date of this
Agreement through and including such dates.

The Option to acquire that number of shares of Performance Option Stock originally subject to this
Agreement that do not become Option Stock, if any, in accordance with subsection (i) above shall be
forfeited immediately by the Optionee upon the determination of the Committee that the necessary
performance criteria have not been met. In the event of the Optionee’s death or Disability, or a
Change in Control, the Option to acquire Performance Option Stock subject to this award (that has
not previously been forfeited by the Grantee) shall become an Option to acquire Option Stock.
Notwithstanding subsections (ii) and (iii) above, each outstanding unvested Option to acquire
Option Stock shall vest and become exercisable in full in the event of the Optionee’s death,
Disability or Retirement, provided the Optionee has remained continuously employed by the Company
from the date of this Agreement to such event. If the Optionee’s termination meets the
requirements of an Early Retirement (as defined below), this Option shall vest as though the
Optionee had undergone a Retirement. “Early Retirement” means retirement with the express
consent of the Committee at or before the time of such retirement, from active employment with the
Company prior to age sixty-five (65).

(b) Notwithstanding the foregoing, upon the termination of the Optionee’s employment within
one year following a Change in Control, if the Optionee’s employment with the Company (or its
successor) is terminated by (A) the Optionee for Good Reason, or (B) the Company for any reason
other than for Cause, each outstanding unvested Option to acquire Option Stock (to the extent not
previously forfeited) shall vest and become exercisable in full; provided that in the event this
Award is not assumed by the Acquiror under the terms set forth in Section 13(a) of the
Plan, this Option shall become fully vested and exercisable (to the extent not previously
terminated) with respect to 100% of the Option Stock.

 

 

 

3. Manner of Exercise. The Option may be exercised in whole or in part at any time
within the period permitted hereunder for the exercise of the Option, with respect to whole Shares
only, by serving written notice of intent to exercise the Option delivered to the Company at its
principal office (or to the Company’s designated agent), stating the number of Shares to be
purchased, the person or persons in whose name the Shares are to be registered and each such
person’s address and social security number. Such notice shall not be effective unless
accompanied by payment in full of the Option Price for the number of Shares with respect to
which the Option is then being exercised (the “Option Payment”) and, except as otherwise
provided herein, cash equal to the required withholding taxes as set forth by Internal Revenue
Service and applicable state tax guidelines for the employer’s minimum statutory withholding. The
Option Payment shall be made in cash or cash equivalents or in whole Shares previously acquired by
the Optionee and valued at the Shares’ Fair Market Value on the date of exercise (or next
succeeding trading date if the date of exercise is not a trading date), or by a combination of such
cash (or cash equivalents) and Shares. Subject to applicable securities laws, the Optionee may
also exercise the Option (a) by delivering a notice of exercise of the Option and by simultaneously
selling the Shares of Option Stock thereby acquired pursuant to a brokerage or similar agreement
approved in advance by proper officers of the Company, using the proceeds of such sale as payment
of the Option Payment, together with any applicable withholding taxes, or (b) by directing the
Company to withhold that number of whole Shares otherwise deliverable to the Optionee pursuant to
the Option having an aggregate Fair Market Value at the time of exercise equal to the Option
Payment. Unless otherwise provided by the Committee at any time, to satisfy any applicable
withholding taxes, in lieu of cash the Optionee may direct the Company to withhold that number of
whole Shares otherwise deliverable to the Optionee pursuant to the Option.

4. Termination of Option. The Option will expire ten (10) years from the date of
grant of the Option (the “Term”) with respect to any then unexercised portion thereof, unless
terminated earlier as set forth below:

(a) Termination by Death. If the Optionee’s employment by the Company terminates by
reason of death, or if the Optionee dies within three (3) months after termination of such
employment for any reason other than Cause, this Option may thereafter be exercised, to the extent
the Option was exercisable at the time of such termination (after giving effect to any acceleration
of vesting provided for in Section 2 above), by the legal representative of the estate or
by the legatee of the Optionee under the will of the Optionee, for a period of one (1) year from
the date of death or until the expiration of the Term of the Option, whichever period is the
shorter.

(b) Termination by Reason of Disability. If the Optionee’s employment by the Company
terminates by reason of Disability, this Option may thereafter be exercised, to the extent the
Option was exercisable at the time of such termination (after giving effect to any acceleration of
vesting provided for in Section 2 above), by the Optionee or personal representative or
guardian of the Optionee, as applicable, for a period of three (3) years from the date of such
termination of employment or until the expiration of the Term of the Option, whichever period is
the shorter.

(c) Termination by Retirement or Early Retirement. If the Optionee’s employment by
the Company terminates by reason of Retirement or Early Retirement, this Option may thereafter be
exercised by the Optionee, to the extent the Option was exercisable at the time of such termination
(after giving effect to any acceleration of vesting provided for in Section 2 above), for a
period of three (3) years from the date of such termination of employment or until the expiration
of the Term of the Option, whichever period is the shorter.

(d) Termination for Cause. If the Optionee’s employment by the Company is terminated
for Cause, this Option shall terminate immediately and become void and of no effect.

 

 

 

(e) Other Termination. If the Optionee’s employment by the Company terminates for any
reason other than for Cause, death, Disability, Retirement or Early Retirement, this Option may be
exercised, to the extent the Option was exercisable at the time of such termination (after giving
effect to any acceleration of vesting provided for in Section 2 above), by the Optionee for
a period of three (3) months from the date of such termination of employment or the expiration of
the Term of the Option, whichever period is the shorter.

5. No Right to Continued Employment. The grant of the Option shall not be construed
as giving the Optionee the right to be retained in the employ of the Company, and the Company may
at any time dismiss the Optionee from employment, free from any liability or any claim under the
Plan.

6. Adjustment to Option Stock. The Committee may make equitable and appropriate
adjustments in the terms and conditions of, and the criteria included in, this Option in
recognition of unusual or nonrecurring events (and shall make the adjustments for the events
described in Section 4.2 of the Plan) affecting the Company or the financial statements of
the Company or of changes in applicable laws, regulations, or accounting principles in accordance
with the Plan, whenever the Committee determines that such event(s) affect the Shares. Any such
adjustments shall be effected in a manner that precludes the material enlargement of rights and
benefits under this Award.

7. Amendments to Option. Subject to the restrictions contained in the Plan, the
Committee may waive any conditions or rights under, amend any terms of, or alter, suspend,
discontinue, cancel or terminate, the Option, prospectively or retroactively; provided that any
such waiver, amendment, alteration, suspension, discontinuance, cancellation or termination that
would materially and adversely affect the rights of the Optionee or any holder or beneficiary of
the Option shall not to that extent be effective without the consent of the Optionee, holder or
beneficiary affected.

8. Limited Transferability. During the Optionee’s lifetime, this Option can be
exercised only by the Optionee. This Option may not be assigned, alienated, pledged, attached,
sold or otherwise transferred or encumbered by the Optionee other than by will or the laws of
descent and distribution. Any attempt to otherwise transfer this Option shall be void. No
transfer of this Option by the Optionee by will or by laws of descent and distribution shall be
effective to bind the Company unless the Company shall have been furnished with written notice
thereof and an authenticated copy of the will and/or such other evidence as the Committee may deem
necessary or appropriate to establish the validity of the transfer.

9. Reservation of Shares. At all times during the term of this Option, the Company
shall use its best efforts to reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of this Agreement.

10. Plan Governs. The Optionee hereby acknowledges receipt of a copy of (or
electronic link to) the Plan and agrees to be bound by all the terms and provisions thereof. The
terms of this Agreement are governed by the terms of the Plan, and in the case of any inconsistency
between the terms of this Agreement and the terms of the Plan, the terms of the Plan shall govern.

 

 

 

11. Severability. If any provision of this Agreement is, or becomes, or is deemed to
be invalid, illegal, or unenforceable in any jurisdiction or as to any Person or the Award, or
would disqualify the Plan or Award under any laws deemed applicable by the Committee, such
provision shall be construed or deemed amended to conform to the applicable laws, or if it cannot
be construed or deemed amended without, in the determination of the Committee, materially altering
the intent of the Plan or the Award, such provision shall be stricken as to such jurisdiction,
Person or Award, and the remainder of the Plan and Award shall remain in full force and effect.

12. Notices. All notices required to be given under this Award shall be deemed to be
received if delivered or mailed as provided for herein to the parties at the following addresses,
or to such other address as either party may provide in writing from time to time.

	 	 	 
	To the Company:

	 	HealthSpring, Inc.
	 

	 	9009 Carothers Parkway
	 

	 	Suite 501
	 

	 	Franklin, Tennessee 37067
	 

	 	Attn: Corporate Secretary
	 
	 	 
	To the Optionee:

	 	The address then maintained with respect to the Optionee in the Company’s records.

13. Governing Law. The validity, construction and effect of this Agreement shall be
determined in accordance with the laws of the State of Delaware without giving effect to conflicts
of laws principles.

14. Resolution of Disputes. Any dispute or disagreement which may arise under, or as
a result of, or in any way related to, the interpretation, construction or application of this
Agreement shall be determined by the Committee. Any determination made hereunder shall be final,
binding and conclusive on the Optionee and the Company for all purposes.

15. Successors in Interest. This Agreement shall inure to the benefit of and be
binding upon any successor to the Company. This Agreement shall inure to the benefit of the
Optionee’s legal representative and assignees. All obligations imposed upon the Optionee and all
rights granted to the Company under this Agreement shall be binding upon the Optionee’s heirs,
executors, administrators, successors and assignees.

 

 

 

IN WITNESS WHEREOF, the parties have caused this Non-Qualified Stock Option Agreement to be
duly executed effective as of the day and year first above written.

	 	 	 	 	 
	 	HEALTHSPRING, INC.

 	 
	 	By:  	 	 
	 
	 	OPTIONEE:

 	 
	 	 	 
	 	SignatureExhibit 10.18

Exhibit
10.18

Explanatory Note Regarding Medicare Contracts between HealthSpring, Inc. and CMS

Certain subsidiaries of HealthSpring, Inc. (“HealthSpring”) and the Centers for Medicaid and
Medicare Services have entered into 15 separate contracts that allow the HealthSpring subsidiary to
provide Medicare services under 42 CFR Part 422. In each case, the relevant coordinated care
contract designates the HealthSpring subsidiary as a Medicare Advantage Organization (“MA
Organization”). Set forth below is the form of coordinated care contract (which includes the
addenda discussed below).

Certain of the coordinated care contracts contain addenda providing for the operation of an
Employer/Union only Group Medicare Advantage Health Plan and an Employer/Union only Group Medicare
Advantage Prescription Drug Plan (collectively, the “Employer/Union Group Addenda”).

The following chart summarizes the 15 individual contracts by type and entity:

	 	 	 	 	 
	Contract	 	HealthSpring Entity	 	Employer/Union Group Addenda (Y/N)
	 
	1. H4454

	 	HealthSpring of Tennessee, Inc.
	 	Y
	2. H4513

	 	HealthSpring Life & Health Insurance Company, Inc.
	 	Y
	3. H0150

	 	HealthSpring of Alabama, Inc.
	 	Y
	4. H1415

	 	HealthSpring of Tennessee, Inc.
	 	Y
	5. H4407

	 	HealthSpring of Tennessee, Inc.
	 	Y
	6. H5410

	 	HealthSpring of Florida, Inc.
	 	N
	7. H7787

	 	HealthSpring Life & Health Insurance Company, Inc.
	 	N
	8. H2165

	 	HealthSpring Life & Health Insurance Company, Inc.
	 	N
	9. H1355

	 	Bravo Health Insurance Company, Inc.
	 	N
	10. H2108

	 	Bravo Health Mid-Atlantic, Inc.
	 	N
	11. H9184

	 	Bravo Health Mid-Atlantic, Inc.
	 	N
	12. H3949

	 	Bravo Health Pennsylvania, Inc.
	 	N
	13. H3964

	 	Bravo Health Pennsylvania, Inc.
	 	N
	14. H7281

	 	Bravo Health Pennsylvania, Inc.
	 	N
	15. H4528

	 	Bravo Health Texas, Inc.
	 	N

 

 

 

CONTRACT WITH ELIGIBLE MEDICARE ADVANTAGE (MA) ORGANIZATION PURSUANT TO 

SECTIONS 1851 THROUGH 1859 OF THE SOCIAL SECURITY ACT FOR THE OPERATION OF A 

MEDICARE ADVANTAGE COORDINATED CARE PLAN(S)

CONTRACT (____)

Between

Centers for Medicare & Medicaid Services (hereinafter referred to as CMS)

and

(hereinafter referred to as the MA Organization)

CMS and the MA Organization, an entity which has been determined to be an eligible Medicare
Advantage Organization by the Administrator of the Centers for Medicare & Medicaid Services under
42 CFR 422.503, agree to the following for the purposes of sections 1851 through 1859 of the Social
Security Act (hereinafter referred to as the Act):

(NOTE: Citations indicated in brackets are placed in the text of this contract to note the
regulatory authority for certain contract provisions. All references to Part 422 are to 42 CFR Part
422.)

 

2

 

Article I.

Term of Contract

The term of this contract shall be from the date of signature by CMS authorized representative
through December 31, 2011, after which this contract may be renewed for successive one-year periods
in accordance with 42 CFR 422.505(c) and as discussed in Paragraph A in Article VII below.
[422.505]

This contract governs the respective rights and obligations of the parties as of the effective date
set forth above, and supersedes any prior agreements between the MA Organization and CMS as of such
date. MA organizations offering Part D also must execute an Addendum to the Medicare Managed Care
Contract Pursuant to Sections 1860D-1 through 1860D-42 of the Social Security Act for the Operation
of a Voluntary Medicare Prescription Drug Plan (hereafter the “Part D Addendum”). For MA
Organizations offering MA-PD plans, the Part D Addendum governs the rights and obligations of the
parties relating to the provision of Part D benefits, in accordance with its terms, as of its
effective date.

Article II.

Coordinated Care Plan

A. The Medicare Advantage Organization agrees to operate one or more coordinated care plans as
defined in 42 CFR 422.4(a)(1)(iii)), including at least one MA-PD plan as required under 42 CFR
422.4(c), as described in its final Plan Benefit Package (PBP) bid submission (benefit and price
bid) proposal as approved by CMS and as attested to in the Medicare Advantage Attestation of
Benefit Plan and Price, and in compliance with the requirements of this contract and applicable
Federal statutes, regulations, and policies (e.g., policies as described in the Call Letter,
Medicare Managed Care Manual, etc.).

B. Except as provided in paragraph (C) of this Article, this contract is deemed to incorporate any
changes that are required by statute to be implemented during the term of the contract and any
regulations or policies implementing or interpreting such statutory provisions.

C. CMS will not implement, other than at the beginning of a calendar year, requirements under 42
CFR Part 422 that impose a new significant cost or burden on MA organizations or plans, unless a
different effective date is required by statute. [422.521]

D. This contract is in no way intended to supersede or modify 42 CFR, Part 422. Failure to
reference a regulatory requirement in this contract does not affect the applicability of such
requirements to the MA organization and CMS.

E. The MA organization must comply with all applicable requirements as described in CMS regulations
and guidance implementing the Medicare Improvements for Patients and Providers Act of 2008.

Article III.

Functions To Be Performed By Medicare Advantage Organization

A. PROVISION OF BENEFITS

1. The MA Organization agrees to provide enrollees in each of its MA plans the basic benefits
as required under §422.101 and, to the extent applicable, supplemental benefits under §422.102 and
as established in the MA Organizations final benefit and price bid proposal as approved by CMS and
listed in the MA Organization Plan Attestation of Benefit Plan and Price, which is attached to this
contract. The MA Organization agrees to provide access to such benefits as required under subpart C
in a manner consistent with professionally recognized standards of health care and according to the
access standards stated in §422.112.

2. The MA Organization agrees to provide post-hospital extended care services, should an MA
enrollee elect such coverage, through a skilled nursing home facility according to the requirements
of section
1852(1) of the Act and §422.133. A skilled nursing home facility is a facility in which an MA
enrollee resided at the time of admission to the hospital, a facility that provides services
through a continuing care retirement community, a facility in which the spouse of the enrollee is
residing at the time of the enrollees discharge from the hospital, or hospital, or wherever the
enrollee resides immediately before admission for extended care services. [422. 133; 422.504(a)(3)]

 

3

 

B. ENROLLMENT REQUIREMENTS

1. The MA Organization agrees to accept new enrollments, make enrollments effective, process
voluntary disenrollments, and limit involuntary disenrollments, as provided in subpart B of part
422.

2. The MA Organization shall comply with the provisions of §422.110 concerning prohibitions
against discrimination in beneficiary enrollment, other than in enrolling eligible beneficiaries in
a CMA-approved special needs plan that exclusively enrolls special needs individuals as consistent
with §§422.2, 422.4(a)(1)(iv) and 422.52. [422.504(a)(2)]

C. BENEFICIARY PROTECTIONS

1. The MA Organization agrees to comply with all requirements in subpart M of part 422,
governing coverage determinations, grievances, and appeals. [422.504(a)(7)]

2. The MA Organization agrees to comply with the confidentiality and enrollee record accuracy
requirements in §422.118.

3. Beneficiary Financial Protections. The MA Organization agrees to comply with the following
requirements:

(a) Each MA Organization must adopt and maintain arrangements satisfactory to CMS to protect
its enrollees from incurring liability for payment of any fees that are the legal obligation of the
MA Organization. To meet this requirement the MA Organization must—

(i) Ensure that all contractual or other written arrangements with providers prohibit the
Organization’s providers from holding any beneficiary enrollee liable for payment of any fees that
are the legal obligation of the MA Organization; and

(ii) Indemnify the beneficiary enrollee for payment of any fees that are the legal obligation
of the MA Organization for services furnished by providers that do not contract, or that have not
otherwise entered into an agreement with the MA Organization, to provide services to the
organization’s beneficiary enrollees. [422.504(g)(1)]

(b) The MA Organization must provide for continuation of enrollee health care benefits

(i) For all enrollees, for the duration of the contract period for which CMS payments have
been made; and

(ii) For enrollees who are hospitalized on the date its contract with CMS terminates, or, in
the event of the MA Organizations insolvency, through the date of discharge. [422.504(g)(2)]

(c) In meeting the requirements of this section (C), other than the provider contract
requirements specified in paragraph (C)(3)(a) of this Article, the MA Organization may use—

(i) Contractual arrangements;

(ii) Insurance acceptable to CMS;

(iii) Financial reserves acceptable to CMS; or

(iv) Any other arrangement acceptable to CMS. [422.504(g)(3)]

 

4

 

D. PROVIDER PROTECTIONS

1. The MA Organization agrees to comply with all applicable provider requirements in 42 CFR
Part 422 Subpart E, including provider certification requirements, anti-discrimination
requirements, provider participation and consultation requirements, the prohibition on interference
with provider advice, limits on provider indemnification, rules governing payments to providers,
and limits on physician incentive plans. [422.504(a)(6)]

2. Prompt Payment.

(a) The MA Organization must pay 95 percent of “clean claims” within 30 days of receipt if
they are claims for covered services that are not furnished under a written agreement between the
organization and the provider.

(i) The MA Organization must pay interest on clean claims that are not paid within 30 days in
accordance with sections 1816(c)(2) and 1842(c)(2) of the Act.

(ii) All other claims from non-contracted providers must be paid or denied within 60 calendar
days from the date of the request. [422.520(a)]

(b) Contracts or other written agreements between the MA Organization and its providers must
contain a prompt payment provision, the terms of which are developed and agreed to by both the MA
Organization and the relevant provider. [422.520(b)]

(c) If CMS determines, after giving notice and opportunity for hearing, that the MA
Organization has failed to make payments in accordance with subparagraph (2)(a) of this section,
CMS may provide

(i) For direct payment of the sums owed to providers; and

(ii) For appropriate reduction in the amounts that would otherwise be paid to the MA
Organization, to reflect the amounts of the direct payments and the cost of making those payments.
[422.520(c)]

E. QUALITY IMPROVEMENT PROGRAM

1. The MA Organization agrees to operate, for each plan that it offers, an ongoing quality
improvement program as stated in accordance with Section 1852(e) of the Social Security Act and 42
CFR 422.152.

2. Chronic Care Improvement Program

(a) Each MA organization must have a chronic care improvement program and must establish
criteria for participation in the program. The CCIP must have a method for identifying enrollees
with multiple or sufficiently severe chronic conditions who meet the criteria for participation in
the program and a mechanism for monitoring enrollees participation in the program.

(b) Plans have flexibility to choose the design of their program; however, in addition to
meeting the requirements specified above, the CCIP selected must be relevant to the plans MA
population. MA organizations are required to submit annual reports on their CCIP program to CMS.

3. Performance Measurement and Reporting: The MA Organization shall measure performance under
its MA plans using standard measures required by CMS, and report (at the organization level) its
performance to CMS. The standard measures required by CMS during the term of this contract will be
uniform data collection and reporting instruments, to include the Health Plan and Employer Data
Information Set (HEDIS), Consumer
Assessment of Health Plan Satisfaction (CAHPS) survey, and Health Outcomes Survey (HOS). These
measures will address clinical areas, including effectiveness of care, enrollee perception of care
and use of services; and non-clinical areas including access to and availability of services,
appeals and grievances, and organizational characteristics. [422.152(b)(1), (e)]

 

5

 

4. Utilization Review:

(a) An MA Organization for an MA coordinated care plan must use written protocols for
utilization review and policies and procedures must reflect current standards of medical practice
in processing requests for initial or continued authorization of services and have in effect
mechanisms to detect both underutilization and over utilization of services. [422.152(b)]

(b) For MA regional preferred provider organizations (RPPOs) and MA local preferred provider
organizations (PPOs) that are offered by an organization that is not licensed or organized under
State law as an HMOs, if the MA Organization uses written protocols for utilization review, those
policies and procedures must reflect current standards of medical practice in processing requests
for initial or continued authorization of services and include mechanisms to evaluate utilization
of services and to inform enrollees and providers of services of the results of the evaluation.
[422.152(e)]

5. Information Systems:

(a) The MA Organization must:

(i) Maintain a health information system that collects, analyzes and integrates the data
necessary to implement its quality improvement program;

(ii) Ensure that the information entered into the system (particularly that received from
providers) is reliable and complete;

(iii) Make all collected information available to CMS. [422.152(f)(1)]

6. External Review

The MA Organization will comply with any requests by Quality Improvement Organizations to review
the MA Organizations medical records in connection with appeals of discharges from hospitals,
skilled nursing facilities, and home health agencies.

F. COMPLIANCE PLAN

The MA Organization agrees to implement a compliance plan in accordance with the requirements of
§422.503(b)(4)(vi). [422.503(b)(4)(vi)]

G. COMPLIANCE DEEMED ON THE BASIS OF ACCREDITATION

CMS may deem the MA Organization to have met the quality improvement requirements of §1852(e) of
the Act and §422.152, the confidentiality and accuracy of enrollee records requirements of §1852(h)
of the Act and §422.118, the anti-discrimination requirements of §1852(b) of the Act and §422.110,
the access to services requirements of §1852(d) of the Act and §422.112, and the advance directives
requirements of §1852(i) of the Act and §422.128, the provider participation requirements of
§1852(j) of the Act and 42 CFR Part 422, Subpart E, and the applicable requirements described in
§423.165, if the MA Organization is fully accredited (and periodically reaccredited) by a private,
national accreditation organization approved by CMS and the accreditation organization used the
standards approved by CMS for the purposes of assessing the MA Organization’s compliance with
Medicare requirements. The provisions of §422.156 shall govern the MA Organization’s use of deemed
status to meet MA program requirements.

 

6

 

H. PROGRAM INTEGRITY

1. The MA Organization agrees to provide notice based on best knowledge, information, and
belief to CMS of any integrity items related to payments from governmental entities, both federal
and state, for healthcare or prescription drug services. These items include any investigations,
legal actions or matters subject to arbitration brought involving the MA Organization (or MA
Organizations firm if applicable) and its subcontractors (excluding contracted network providers),
including any key management or executive staff, or any major shareholders (5% or more), by a
government agency (state or federal) on matters relating to payments from governmental entities,
both federal and state, for healthcare and/or prescription drug services. In providing the notice,
the sponsor shall keep the government informed of when the integrity item is initiated and when it
is closed. Notice should be provided of the details concerning any resolution and monetary payments
as well as any settlement agreements or corporate integrity agreements.

2. The MA Organization agrees to provide notice based on best knowledge, information, and
belief to CMS in the event the MA Organization or any of its subcontractors is criminally convicted
or has a civil judgment entered against it for fraudulent activities or is sanctioned under any
Federal program involving the provision of health care or prescription drug services.

I. MARKETING

1. The MA Organization may not distribute any marketing materials, as defined in 42 CFR
422.2260 and in the Marketing Materials Guidelines for Medicare Advantage-Prescription Drug Plans
and Prescription Drug Plans (Medicare Marketing Guidelines), unless they have been filed with and
not disapproved by CMS in accordance with §422.80. The file and use process set out at §422.2262
must be used, unless the MA organization notifies CMS that it will not use this process.

2. CMS and the MA Organization shall agree upon language setting forth the benefits,
exclusions and other language of the Plan. The MA Organization bears full responsibility for the
accuracy of its marketing materials. CMS, in its sole discretion, may order the MA Organization to
print and distribute the agreed upon marketing materials, in a format approved by CMS. The MA
Organization must disclose the information to each enrollee electing a plan as outlined in 42 CFR
422.111.

3. The MA Organization agrees that any advertising material, including that labeled
promotional material, marketing materials, or supplemental literature, shall be truthful and not
misleading. All marketing materials must include the Contract number. All membership identification
cards must include the Contract number on the front of the card.

4. The MA Organization must comply with the Medicare Marketing Guidelines, as well as all
applicable statutes and regulations, including and without limitation Section 1851(h) of the Act
and 42 CFR § 422.111, 42 CFR Part 422 Subpart V and 42 CFR Part 423 Subpart V. Failure to comply
may result in sanctions as provided in 42 CFR Part 422 Subpart 0.

Article IV.

CMS Payment to MA Organization

A. The MA Organization agrees to develop its annual benefit and price bid proposal and submit to
CMS all required information on premiums, benefits, and cost sharing, as required under 42 CFR Part
422 Subpart F. [422.504(a)(10)]

B. Methodology. CMS agrees to pay the MA Organization under this contract in accordance with the
provisions of section 1853 of the Act and 42 CFR Part 422 Subpart G. [422.504(a)(9)]

C. The MA Organization agrees to abide by the requirements in 42 CFR 495.200 et seq. and §1853(1)
and (m) of the Act, including the fact that payment may be made directly to MA-affiliated hospitals
that are certified Medicare hospitals through the Medicare FFS hospital incentive payment program.

D. Attestation of payment data (Attachments A, B, and C).

 

7

 

As a condition for receiving a monthly payment under paragraph B of this article, and 42 CFR Part
422 Subpart G, the MA Organization agrees that its chief executive officer (CEO), chief financial
officer (CFO), or an individual delegated with the authority to sign on behalf of one of these
officers, and who reports directly to such officer, must request payment under the contract on the
forms attached hereto as Attachment A (enrollment attestation) and Attachment B (risk adjustment
data) which attest to (based on best knowledge, information and belief, as of the date specified on
the attestation form) the accuracy, completeness, and truthfulness of the data identified on these
attachments. The Medicare Advantage Plan Attestation of Benefit Plan and Price must be signed and
attached to the executed version of this contract.

1. Attachment A requires that the CEO, CFO, or an individual delegated with the authority to
sign on behalf of one of these officers, and who reports directly to such officer, must attest
based on best knowledge, information, and belief that each enrollee for whom the MA Organization is
requesting payment is validly enrolled, or was validly enrolled during the period for which payment
is requested, in an MA plan offered by the MA Organization. The MA Organization shall submit
completed enrollment attestation forms to CMS, or its contractor, on a monthly basis. (NOTE: The
forms included as attachments to this contract are for reference only. CMS will provide
instructions for the completion and submission of the forms in separate documents. MA Organizations
should not take any action on the forms until appropriate CMS instructions are made available.)

2. Attachment B requires that the CEO, CFO, or an individual delegated with the authority to
sign on behalf of one of these officers, and who reports directly to such officer, must attest to
(based on best knowledge, information and belief, as of the date specified on the attestation form)
that the risk adjustment data it submits to CMS under §422.310 are accurate, complete, and
truthful. The MA Organization shall make annual attestations to this effect for risk adjustment
data on Attachment B and according to a schedule to be published by CMS. If such risk adjustment
data are generated by a related entity, contractor, or subcontractor of an MA Organization, such
entity, contractor, or subcontractor must also attest to (based on best knowledge, information, and
belief, as of the date specified on the attestation form) the accuracy, completeness, and
truthfulness of the data. [422.504(1)]

3. The Medicare Advantage Plan Attestation of Benefit Plan and Price (an example of which is
attached hereto as Attachment C) requires that the CEO, CFO, or an individual delegated with the
authority to sign on behalf of one of these officers, and who reports directly to such officer,
must attest (based on best knowledge, information and belief, as of the date specified on the
attestation form) that the information and documentation comprising the bid submission proposal is
accurate, complete, and truthful and fully conforms to the Bid Form and Plan Benefit Package
requirements; and that the benefits described in the CMS-approved proposed bid submission agree
with the benefit package the MA Organization will offer during the period covered by the proposed
bid submission. This document is being sent separately to the MA Organization and must be signed
and attached to the executed version of this contract, and is incorporated herein by reference.
[422.504(1)]

Article V.

MA Organization Relationship with Related Entities, Contractors, and Subcontractors

A. Notwithstanding any relationship(s) that the MA Organization may have with related entities,
contractors, or subcontractors, the MA Organization maintains full responsibility for adhering to
and otherwise fully complying with all terms and conditions of its contract with CMS.
[422.504(i)(1)]

B. The MA Organization agrees to require all related entities, contractors, or subcontractors to
agree that

1. HHS, the Comptroller General, or their designees have the right to inspect, evaluate, and
audit any pertinent contracts, books, documents, papers, and records of the related entity(s),
contractor(s), or subcontractor(s) involving transactions related to this contract; and

2. HHS, the Comptroller General, or their designees have the right to inspect, evaluate, and
audit any pertinent information for any particular contract period for 10 years from the final date
of the contract period or from the date of completion of any audit, whichever is later.
[422.504(i)(2)]

 

8

 

C. The MA Organization agrees that all contracts or written arrangements into which the MA
Organization enters with providers, related entities, contractors, or subcontractors (first tier
and downstream entities) shall contain the following elements:

1. Enrollee protection provisions that provide

(a) Consistent with Article III(C), arrangements that prohibit providers from holding an
enrollee liable for payment of any fees that are the legal obligation of the MA Organization; and

(b) Consistent with Article III(C), provision for the continuation of benefits.

2. Accountability provisions that indicate that the MA Organization may only delegate
activities or functions to a provider, related entity, contractor, or subcontractor in a manner
consistent with requirements set forth at paragraph D of this article.

3. A provision requiring that any services or other activity performed by a related entity,
contractor or subcontractor in accordance with a contract or written agreement between the related
entity, contractor, or subcontractor and the MA Organization will be consistent and comply with the
MA Organization’s contractual obligations to CMS. [422.504(i)(3)]

D. If any of the MA Organization’s activities or responsibilities under this contract with CMS is
delegated to other parties, the following requirements apply to any related entity, contractor,
subcontractor, or provider:

1. Written arrangements must specify delegated activities and reporting responsibilities.

2. Written arrangements must either provide for revocation of the delegation activities and
reporting requirements or specify other remedies in instances where CMS or the MA Organization
determine that such parties have not performed satisfactorily.

3. Written arrangements must specify that the performance of the parties is monitored by the
MA Organization on an ongoing basis.

4. Written arrangements must specify that either

(a) The credentials of medical professionals affiliated with the party or parties will be
either reviewed by the MA Organization; or

(b) The credentialing process will be reviewed and approved by the MA Organization and the MA
Organization must audit the credentialing process on an ongoing basis.

5. All contracts or written arrangements must specify that the related entity, contractor, or
subcontractor must comply with all applicable Medicare laws, regulations, and CMS instructions.
[422.504(i)(4)]

E. If the MA Organization delegates selection of the providers, contractors, or subcontractors to
another organization, the MA Organization’s written arrangements with that organization must state
that the MA Organization retains the right to approve, suspend, or terminate any such arrangement.
[422.504(i)(5)]

F. As of the date of this contract and throughout its term, the MA Organization

1. Agrees that any physician incentive plan it operates meets the requirements of §422.208,
and

2. Has assured that all physicians and physician groups that the MA Organizations physician
incentive plan places at substantial financial risk have adequate stop-loss protection in
accordance with §422.208(f). [422.208]

 

9

 

Article VI.

Records Requirements

A. MAINTENANCE OF RECORDS

1. The MA Organization agrees to maintain for 10 years books, records, documents, and other
evidence of accounting procedures and practices that

(a) Are sufficient to do the following:

(i) Accommodate periodic auditing of the financial records (including data related to Medicare
utilization, costs, and computation of the benefit and price bid) of the MA Organization.

(ii) Enable CMS to inspect or otherwise evaluate the quality, appropriateness and timeliness
of services performed under the contract, and the facilities of the MA Organization.

(iii) Enable CMS to audit and inspect any books and records of the MA Organization that
pertain to the ability of the organization to bear the risk of potential financial losses, or to
services performed or determinations of amounts payable under the contract.

(iv) Properly reflect all direct and indirect costs claimed to have been incurred and used in
the preparation of the benefit and price bid proposal.

(v) Establish component rates of the benefit and price bid for determining additional and
supplementary benefits.

(vi) Determine the rates utilized in setting premiums for State insurance agency purposes and
for other government and private purchasers; and

(b) Include at least records of the following:

(i) Ownership and operation of the MA Organization’s financial, medical, and other record
keeping systems.

(ii) Financial statements for the current contract period and six prior periods.

(iii) Federal income tax or informational returns for the current contract period and six
prior periods.

(iv) Asset acquisition, lease, sale, or other action.

(v) Agreements, contracts (including, but not limited to, with related or unrelated
prescription drug benefit managers) and subcontracts.

(vi) Franchise, marketing, and management agreements.

(vii) Schedules of charges for the MA Organization’s fee-for-service patients.

(viii) Matters pertaining to costs of operations.

(ix) Amounts of income received, by source and payment.

(x) Cash flow statements.

(xi) Any financial reports filed with other Federal programs or State authorities.[422.504(d)]

 

10

 

2. Access to facilities and records. The MA Organization agrees to the following:

(a) The Department of Health and Human Services (HHS), the Comptroller General, or their
designee may evaluate, through inspection or other means—

(i) The quality, appropriateness, and timeliness of services furnished to Medicare enrollees
under the contract;

(ii) The facilities of the MA Organization; and

(iii) The enrollment and disenrollment records for the current contract period and ten prior
periods.

(b) HHS, the Comptroller General, or their designees may audit, evaluate, or inspect any
books, contracts, medical records, documents, papers, patient care documentation, and other records
of the MA Organization, related entity, contractor, subcontractor, or its transferee that pertain
to any aspect of services performed, reconciliation of benefit liabilities, and determination of
amounts payable under the contract, or as the Secretary may deem necessary to enforce the contract.

(c) The MA Organization agrees to make available, for the purposes specified in section (A) of
this article, its premises, physical facilities and equipment, records relating to its Medicare
enrollees, and any additional relevant information that CMS may require, in a manner that meets CMS
record maintenance requirements.

(d) HHS, the Comptroller General, or their designee’s right to inspect, evaluate, and audit
extends through 10 years from the final date of the contract period or completion of audit,
whichever is later unless

(i) CMS determines there is a special need to retain a particular record or group of records
for a longer period and notifies the MA Organization at least 30 days before the normal disposition
date;

(ii) There has been a termination, dispute, or fraud or similar fault by the MA Organization,
in which case the retention may be extended to 10 years from the date of any resulting final
resolution of the termination, dispute, or fraud or similar fault; or

(iii) HHS, the Comptroller General, or their designee determines that there is a reasonable
possibility of fraud, in which case they may inspect, evaluate, and audit the MA Organization at
any time. [422.504(e)]

B. REPORTING REQUIREMENTS

1. The MA Organization shall have an effective procedure to develop, compile, evaluate, and
report to CMS, to its enrollees, and to the general public, at the times and in the manner that CMS
requires, and while safeguarding the confidentiality of the doctor patient relationship, statistics
and other information as described in the remainder of this section (B). [422.516(a)]

2. The MA Organization agrees to submit to CMS certified financial information that must
include the following:

(a) Such information as CMS may require demonstrating that the organization has a fiscally
sound operation, including:

(i) The cost of its operations;

 

11

 

(ii) A description, submitted to CMS annually and within 120 days of the end of the fiscal
year, of significant business transactions (as defined in §422.500) between the MA Organization and
a party in interest showing that the costs of the transactions listed in paragraph (2)(a)(v) of
this section do not exceed the costs that would be incurred if these transactions were with someone
who is not a party in interest; or

(iii) If they do exceed, a justification that the higher costs are consistent with prudent
management and fiscal soundness requirements.

(iv) A combined financial statement for the MA Organization and a party in interest if either
of the following conditions is met:

(aa) thirty-five percent or more of the costs of operation of the MA Organization go to a
party in interest.

(bb) thirty-five percent or more of the revenue of a party in interest is from the MA
Organization. [422.516(b)]

(v) Requirements for combined financial statements.

(aa) The combined financial statements required by paragraph (2)(a)(iv) must display in
separate columns the financial information for the MA Organization and each of the parties in
interest.

(bb) Inter-entity transactions must be eliminated in the consolidated column.

(cc) The statements must have been examined by an independent auditor in accordance with
generally accepted accounting principles and must include appropriate opinions and notes.

(dd) Upon written request from the MA Organization showing good cause, CMS may waive the
requirement that the organization’s combined financial statement include the financial information
required in paragraph (2)(a)(v) with respect to a particular entity. [422.516(c)]

(vi) A description of any loans or other special financial arrangements the MA Organization
makes with contractors, subcontractors, and related entities. [422.516(e)]

(b) Such information as CMS may require pertaining to the disclosure of ownership and control
of the MA Organization. [422.504(f)]

(c) Patterns of utilization of the MA Organization’s services. [422.516(a)(2)]

3. The MA Organization agrees to participate in surveys required by CMS and to submit to CMS
all information that is necessary for CMS to administer and evaluate the program and to
simultaneously establish and facilitate a process for current and prospective beneficiaries to
exercise choice in obtaining Medicare services. This information includes, but is not limited to:

(a) The benefits covered under the MA plan;

(b) The MA monthly basic beneficiary premium and MA monthly supplemental beneficiary premium,
if any, for the plan.

(c) The service area and continuation area, if any, of each plan and the enrollment capacity
of each plan;

(d) Plan quality and performance indicators for the benefits under the plan including —

 

12

 

(i) Disenrollment rates for Medicare enrollees electing to receive benefits through the plan
for the previous 2 years;

(ii) Information on Medicare enrollee satisfaction;

(iii) The patterns of utilization of plan services;

(iv) The availability, accessibility, and acceptability of the plan’s services;

(v) Information on health outcomes and other performance measures required by CMS;

(vi) The recent record regarding compliance of the plan with requirements of this part, as
determined by CMS; and

(vii) Other information determined by CMS to be necessary to assist beneficiaries in making an
informed choice among MA plans and traditional Medicare;

(e) Information about beneficiary appeals and their disposition;

(f) Information regarding all formal actions, reviews, findings, or other similar actions by
States, other regulatory bodies, or any other certifying or accrediting organization;

(g) Any other information deemed necessary by CMS for the administration or evaluation of the
Medicare program. [422.504(f)(2)]

4. The MA Organization agrees to provide to its enrollees and upon request, to any individual
eligible to elect an MA plan, all informational requirements under §422.64 and, upon an enrollee’s,
request, the financial disclosure information required under §422.516. [422.504(f)(3)]

5. Reporting and disclosure under ERISA.

(a) For any employees’ health benefits plan that includes an MA Organization in its offerings,
the MA Organization must furnish, upon request, the information the plan needs to fulfill its
reporting and disclosure obligations (with respect to the MA Organization) under the Employee
Retirement Income Security Act of 1974 (ERISA).

(b) The MA Organization must furnish the information to the employer or the employer’s
designee, or to the plan administrator, as the term “administrator” is defined in ERISA.
[422.516(d)]

6. Electronic communication. The MA Organization must have the capacity to communicate with
CMS electronically. [422.504(b)]

7. Risk Adjustment data. The MA Organization agrees to comply with the requirements in
§422.310 for submitting risk adjustment data to CMS. [422.504(a)(8)]

Article VII.

Renewal of the MA Contract

A. Renewal of contract: In accordance with §422.505, following the initial contract period, this
contract is renewable annually only if

1. The MA Organization has not provided CMS with a notice of intention not to renew;
[422.506(a)]

 

13

 

2. CMS and the MA Organization reach agreement on the bid under 42 CFR Part 422, Subpart F;
and [422.505(d)]

3. CMS informs the MA Organization that it authorizes a renewal.

B. Nonrenewal of contract

1. Nonrenewal by the Organization.

(a) In accordance with §422.506, the MA Organization may elect not to renew its contract with
CMS as of the end of the term of the contract for any reason, provided it meets the time frames for
doing so set forth in subparagraphs (b) and (c) of this paragraph.

(b) If the MA Organization does not intend to renew its contract, it must notify—

(i) CMS, in writing, by the first Monday in June of the year in which the contract would end,
pursuant to §422.506

(ii) Each Medicare enrollee by mail, at least 90 calendar days before the date on which the
nonrenewal is effective. This notice must include a written description of all alternatives
available for obtaining Medicare services within the service area including alternative MA plans,
MA-PD plans, Medigap options, and original Medicare and prescription drug plans and must receive
CMS approval prior to issuance.

(c) CMS may accept a nonrenewal notice submitted after the applicable annual non-renewal
notice deadline if -

(i) The MA Organization notifies its Medicare enrollees and the public in accordance with
subparagraph (1)(b)(ii) of this section; and

(ii) Acceptance is not inconsistent with the effective and efficient administration of the
Medicare program.

(d) If the MA Organization does not renew a contract under subparagraph (1), CMS will not
enter into a contract with the Organization for 2 years unless there are special circumstances that
warrant special consideration, as determined by CMS. [422.506(a)]

2. CMS decision not to renew.

(a) CMS may elect not to authorize renewal of a contract for any of the following reasons:

(i) For any of the reasons listed in §422.510(a) [Article VIII, section (B)(1)(a) of this
contract], which would also permit CMS to terminate the contract.

(ii) The MA Organization has committed any of the acts in §422.752(a) that would support the
imposition of intermediate sanctions or civil money penalties under 42 CFR Part 422 Subpart 0.

(iii) The MA Organization did not submit a benefit and price bid or the benefit and price bid
was not acceptable [422.505(d)]

(b) Notice. CMS shall provide notice of its decision whether to authorize renewal of the
contract as follows:

(i) To the MA Organization by August 1 of the contract year, except in the event of (2)(a)(iv)
above, for which notice will be sent by September 1.

 

14

 

(ii) To the MA Organization’s Medicare enrollees by mail at least 90 days before the end of
the current calendar year.

(c) Notice of appeal rights. CMS shall give the MA Organization written notice of its right to
reconsideration of the decision not to renew in accordance with § 422.644.[422.506(b)]

Article VIII.

Modification or Termination of the Contract

A. Modification or Termination of Contract by Mutual Consent

1. This contract may be modified or terminated at any time by written mutual consent.

(a) If the contract is modified by written mutual consent, the MA Organization must notify its
Medicare enrollees of any changes that CMS determines are appropriate for notification within time
frames specified by CMS. [422.508(a)(2)]

(b) If the contract is terminated by written mutual consent, except as provided in section
(A)(2) of this Article, the MA Organization must provide notice to its Medicare enrollees and the
general public as provided in section B(2)(b)(ii) and B(2)(b)(iii) of this Article. [422.508(a)(1)]

2. If this contract is terminated by written mutual consent and replaced the day following
such termination by a new MA contract, the MA Organization is not required to provide the notice
specified in section B of this article. [422.508(b)]

B. Termination of the Contract by CMS or the MA Organization

1. Termination by CMS.

(a) CMS may at any time terminate a contract if CMS determines that the MA Organization meets
any of the following:

(i) has failed substantially to carry out the terms of its contract with CMS.

(ii) is carrying out its contract in a manner that is inconsistent with the efficient and
effective implementation of 42 CFR Part 422.

(iii) no longer substantially meets the applicable conditions of 42CFR Part 422.

(iv) based on creditable evidence, has committed or participated in false, fraudulent or
abusive activities affecting the Medicare, Medicaid or other State or Federal health care program,
including submission of false or fraudulent data.

(v) experiences financial difficulties so severe that its ability to make necessary health
services available is impaired to the point of posing an imminent and serious risk to the health of
its enrollees, or otherwise fails to make services available to the extent that such a risk to
health exists.

(vi) substantially fails to comply with the requirements in 42 CFR Part 422 Subpart M relating
to grievances and appeals.

(vii) fails to provide CMS with valid risk adjustment data as required under §422.310 and
423.329(b)(3).

(viii) fails to implement an acceptable quality improvement program as required under 42 CFR
Part 422 Subpart D.

 

15

 

(ix) substantially fails to comply with the prompt payment requirements in §422.520.

(x) substantially fails to comply with the service access requirements in §422.112.

(xi) fails to comply with the requirements of §422.208 regarding physician incentive plans.

(xii) substantially fails to comply with the marketing requirements in 42 CFR Part 422 Subpart
V.

(b) Notice. If CMS decides to terminate a contract for reasons other than the grounds
specified in section (B)(1)(a) above, it will give notice of the termination as follows:

(i) CMS will notify the MA Organization in writing 90 days before the intended date of the
termination.

(ii) The MA Organization will notify its Medicare enrollees of the termination by mail at
least 30 days before the effective date of the termination.

(iii) The MA Organization will notify the general public of the termination at least 30 days
before the effective date of the termination by publishing a notice in one or more newspapers of
general circulation in each community or county located in the MA Organization’s service area.

(c) Expedited termination of contract by CMS.

(i) For terminations based on violations prescribed in paragraph (B)(1)(a)(iv) or (B)(1)(a)(v)
of this article, CMS will notify the MA Organization in writing that its contract has been
terminated on a date specified by CMS. If a termination is effective in the middle of a month, CMS
has the right to recover the prorated share of the capitation payments made to the MA Organization
covering the period of the month following the contract termination.

(ii) CMS will notify the MA Organization’s Medicare enrollees in writing of CMS’ decision to
terminate the MA Organization’s contract. This notice will occur no later than 30 days after CMS
notifies the plan of its decision to terminate this contract. CMS will simultaneously inform the
Medicare enrollees of alternative options for obtaining Medicare services, including alternative MA
Organizations in a similar geographic area and original Medicare.

(iii) CMS will notify the general public of the termination no later than 30 days after
notifying the MA Organization of CMS’ decision to terminate this contract. This notice will be
published in one or more newspapers of general circulation in each community or county located in
the MA Organization’s service area.

(d) Corrective action plan

(i) General. Before providing a notice of intent to terminate a contract for reasons other
than the grounds specified in section (B)(1)(a)(iv) or (B)(1)(a)(v) of this article, CMS will
provide the MA Organization with notice specifying the MA Organizations deficiencies and a
reasonable opportunity of at least 30 calendar days to develop and implement a corrective action
plan to correct the deficiencies that are the basis of the proposed termination.

(ii) Exceptions. If a contract is terminated under section (B)(1)(a)(iv) or (B)(1)(a)(v) of
this article, the MA Organization will not be provided with the opportunity to develop and
implement a corrective action plan.

(e) Appeal rights. If CMS decides to terminate this contract, it will send written notice to
the MA Organization informing it of its termination appeal rights in accordance with 42 CFR Part
422 Subpart N. [422.510(d)]

 

16

 

2. Termination by the MA Organization

(a) Cause for termination. The MA Organization may terminate this contract if CMS fails to
substantially carry out the terms of the contract.

(b) Notice. The MA Organization must give advance notice as follows:

(i) To CMS, at least 90 days before the intended date of termination. This notice must specify
the reasons why the MA Organization is requesting contract termination.

(ii) To its Medicare enrollees, at least 60 days before the termination effective date. This
notice must include a written description of alternatives available for obtaining Medicare services
within the service area, including alternative MA and MA-PD plans, PDP plans, Medigap options, and
original Medicare and must receive CMS approval.

(iii) To the general public at least 60 days before the termination effective date by
publishing a CMS-approved notice in one or more newspapers of general circulation in each community
or county located in the MA Organization’s geographic area.

(c) Effective date of termination. The effective date of the termination will be determined by
CMS and will be at least 90 days after the date CMS receives the MA Organization’s notice of intent
to terminate.

(d) CMS’ liability. CMS’ liability for payment to the MA Organization ends as of the first day
of the month after the last month for which the contract is in effect, but CMS shall make payments
for amounts owed prior to termination but not yet paid.

(e) Effect of termination by the organization. CMS will not enter into an agreement with the
MA Organization for a period of two years from the date the Organization has terminated this
contract, unless there are circumstances that warrant special consideration, as determined by CMS.
[422.512]

Article IX.

Requirements of Other Laws and Regulations

A. The MA Organization agrees to comply with—

1. Federal laws and regulations designed to prevent or ameliorate fraud, waste, and abuse,
including, but not limited to, applicable provisions of Federal criminal law, the False Claims Act
(31 USC 3729 et seq.) , and the anti -kickback statute (section 1128B(b) of the Act): and

2. HIPAA administrative simplification rules at 45 CFR parts 160, 162, and 164. [422.504(h)]

B. Pursuant to section 13112 of the American Recovery and Reinvestment Act of 2009 (ARRA), the MA
Organization agrees that as it implements, acquires, or upgrades its health information technology
systems, it shall utilize, where available, health information technology systems and products that
meet standards and implementation specifications adopted under section 3004 of the Public Health
Service Act, as amended by section 13101 of the ARRA.

C. The MA Organization maintains ultimate responsibility for adhering to and otherwise fully
complying with all terms and conditions of its contract with CMS, notwithstanding any
relationship(s) that the MA organization may have with related entities, contractors, or
subcontractors. [422.504(i)]

 

17

 

D. In the event that any provision of this contract conflicts with the provisions of any statute or
regulation applicable to an MA Organization, the provisions of the statute or regulation shall have
full force and effect.

Article X.

Severability

The MA Organization agrees that, upon CMS’ request, this contract will be amended to exclude any MA
plan or State-licensed entity specified by CMS, and a separate contract for any such excluded plan
or entity will be deemed to be in place when such a request is made. [422.504(k)]

Article XI.

Miscellaneous

A. Definitions. Terms not otherwise defined in this contract shall have the meaning given to such
terms in 42 CFR Part 422.

B. Alteration to Original Contract Terms. The MA Organization agrees that it has not altered in any
way the terms of this contract presented for signature by CMS. The MA Organization agrees that any
alterations to the original text the MA Organization may make to this contract shall not be binding
on the parties.

C. Approval to Begin Marketing and Enrollment. The MA Organization agrees that it must complete CMS
operational requirements prior to receiving CMS approval to begin Part C marketing and enrollment
activities. Such activities include, but are not limited to, establishing and successfully testing
connectivity with CMS systems to process enrollment applications (or contracting with an entity
qualified to perform such functions on the MA Organizations Sponsors behalf) and successfully
demonstrating capability to submit accurate and timely price comparison data. To establish and
successfully test connectivity, the MA Organization must, 1) establish and test physical
connectivity to the CMS data center, 2) acquire user identifications and passwords, 3) receive,
store, and maintain data necessary to perform enrollments and send and receive transactions to and
from CMS, and 4) check and receive transaction status information.

 

18

 

ATTACHMENT A

ATTESTATION OF ENROLLMENT INFORMATION

RELATING TO CMS PAYMENT

TO A MEDICARE ADVANTAGE ORGANIZATION

Pursuant to the contract(s) between the Centers for Medicare & Medicaid Services (CMS) and
(INSERT NAME OF MA ORGANIZATION), hereafter referred to as the MA Organization, governing
the operation of the following Medicare Advantage plans (INSERT PLAN IDENTIFICATION NUMBERS
HERE), the MA Organization hereby requests payment under the contract, and in doing so, makes
the following attestation concerning CMS payments to the MA Organization. The MA Organization
acknowledges that the information described below directly affects the calculation of CMS payments
to the MA Organization and that misrepresentations to CMS about the accuracy of such information
may result in Federal civil action and/or criminal prosecution. This attestation shall not be
considered a waiver of the MA Organization’s right to seek payment adjustments from CMS based on
information or data which does not become available until after the date the MA Organization
submits this attestation.

1. The MA Organization has reported to CMS for the month of (INDICATE MONTH AND YEAR) all
new enrollments, disenrollments, and appropriate changes in enrollees status with respect to the
above-stated MA plans. Based on best knowledge, information, and belief as of the date indicated
below, all information submitted to CMS in this report is accurate, complete, and truthful.

2. The MA Organization has reviewed the CMS monthly membership report and reply listing for the
month of (INDICATE MONTH AND YEAR) for the above-stated MA plans and has reported to CMS
any discrepancies between the report and the MA Organization’s records. For those portions of the
monthly membership report and the reply listing to which the MA Organization raises no objection,
the MA Organization, through the certifying CEO/CFO, will be deemed to have attested, based on best
knowledge, information, and belief as of the date indicated below, to its accuracy, completeness,
and truthfulness.

 

19

 

ATTACHMENT B

ATTESTATION OF RISK ADJUSTMENT DATA INFORMATION RELATING TO

CMS PAYMENT TO A MEDICARE ADVANTAGE ORGANIZATION

Pursuant to the contract(s) between the Centers for Medicare & Medicaid Services (CMS) and
(INSERT NAME OF MA ORGANIZATION), hereafter referred to as the MA Organization, governing
the operation of the following Medicare Advantage plans (INSERT PLAN IDENTIFICATION NUMBERS
HERE), the MA Organization hereby requests payment under the contract, and in doing so, makes
the following attestation concerning CMS payments to the MA Organization. The MA Organization
acknowledges that the information described below directly affects the calculation of CMS payments
to the MA Organization or additional benefit obligations of the MA Organization and that
misrepresentations to CMS about the accuracy of such information may result in Federal civil action
and/or criminal prosecution.

The MA Organization has reported to CMS during the period of (INDICATE DATES) all
(INDICATE TYPE —  DIAGNOSIS/ENCOUNTER) risk adjustment data available to the MA
Organization with respect to the above-stated MA plans. Based on best knowledge, information, and
belief as of the date indicated below, all information submitted to CMS in this report is accurate,
complete, and truthful.

 

20

 

ATTACHMENT C — Medicare Advantage Plan Attestation of Benefit Plan and Price

 

21

 

In witness whereof, the parties hereby execute this contract.

This document has been electronically signed by:

	 	 	 
	FOR THE MA ORGANIZATION
	 	 
	 
	 	 
	 

Contracting Official Name

	 	 
	 
	 	 
	 

Date

	 	 
	 
	 	 
	 

	 	 
	Organization

	 	Address
	 
	 	 
	FOR THE CENTERS FOR MEDICARE & MEDICAID SERVICES
	 	 
	 
	 	 
	 

	 	 
	 

	 	Date

 

22

 

EMPLOYER/UNION-ONLY GROUP PART C ADDENDUM TO CONTRACT WITH

APPROVED ENTITY PURSUANT TO SECTIONS 1851 THROUGH 1859 OF THE

SOCIAL SECURITY ACT FOR THE OPERATION OF A MEDICARE ADVANTAGE PLAN

The Centers for Medicare & Medicaid Services (hereinafter referred to as “CMS”) and
                    , a Medicare Advantage Organization (hereinafter referred to as the “MA
Organization”) agree to amend the contract
 _____ 

governing the MA Organizations operation of a
Medicare Advantage plan described in section 1851(a)(2)(A) or section 1851(a)(2)(C) of the Social
Security Act (hereinafter referred to as “the Act”), including all attachments, addenda, and
amendments thereto, to include the provisions contained in this Addendum (collectively hereinafter
referred to as the “contract”), under which the MA Organization shall offer Employer/Union-Only
Group MA-Only Plans (hereinafter referred to as “employer/union-only group health plans”) in
accordance with the waivers granted by CMS under section 1857(i) of the Act. The terms of this
Addendum shall only apply to MA-only health plans offered by the MA Organization exclusively to
eligible individuals enrolled in employment-based health coverage under a contract between the MA
Organization and the employer/union sponsor of the employment-based health coverage.

This Addendum is made pursuant to Subpart K of 42 CFR Part 422.

 

23

 

Article I.

Term of Contract

A. MA Organization agrees to operate one or more employer/union-only group health plans in
accordance with the Medicare Advantage contract (as modified by this Addendum), which incorporates
in its entirety the 2011 Application Instructions For Medicare Advantage Organizations To Offer New
Employer/Union-Only Group Waiver Plans (EGWPs) and any employer/union-only group waiver guidance,
including, but not limited to those requirements contained in Chapter 9 of the Medicare Managed
Care Manual).

B. This Addendum is deemed to incorporate any changes that are required by statute to be
implemented during the term of the contract, and any regulations and policies implementing or
interpreting such statutory provisions.

C. In the event of any conflict between the employer/union-only group waiver guidance issued prior
to the execution of the contract and this Addendum, the provisions of this Addendum shall control.
In the event of any conflict between the employer/union-only group waiver guidance issued after the
execution of the contract and this Addendum, the provisions of the employer/union-only group
guidance shall control.

D. This Addendum is in no way intended to supersede or modify 42 CFR Part 422 or sections 1851
through 1859 of the Act, except as specifically provided in applicable employer/union-only group
waiver guidance and/or in this Addendum. Failure to reference a statutory or regulatory requirement
in this Addendum does not affect the applicability of such requirement to the MA Organization and
CMS.

E. The provisions of this Addendum apply to all employer/union-only group health plans offered by
MA Organization under this contract number. In the event of any conflict between the provisions of
this Addendum and any other provision of the contract, the terms of this Addendum shall control.

Article II.

Functions to be Performed by the Medicare Advantage Organization

A. PROVISION OF BENEFITS

1. MA Organization agrees to provide enrollees in each of its employer/union-only group health
plans the basic benefits (hereinafter referred to as “basic benefits”) as required under 42 CFR
§422.101 and, to the extent applicable, supplemental benefits under 42 CFR §422.102 and as
established in the MA Organizations final benefit and price bid proposal as approved by CMS.

2. The requirements in section 1852 of the Act and 42 CFR §422.100(c)(1) pertaining to the
offering of benefits covered under Medicare Part A and in section 1851 of the Act and 42 CFR
§422.50(a)(1) pertaining to who may enroll in an MA plan are waived for employer/union-only group
health plan enrollees who are not entitled to Medicare Part A.

3. For employer/union-only group health plans offering non-calendar year coverage, MA
Organization may determine basic and supplemental benefits (including deductibles, out-of-pocket
limits, etc.) on a non-calendar year basis subject to the following requirements:

(a) Applications, bids, and other submissions to CMS must be submitted on a calendar year
basis; and

(b) CMS payments will be determined on a calendar year basis.

 

24

 

4. For employer/union-only group MA-only plans that have a monthly beneficiary rebate
described in 42 CFR §422.266:

(a) MA Organization may vary the form of rebate for a particular plan benefit package so that
the total monthly rebate amount may be credited differently for each employer/union group to whom
MA Organization offers the plan benefit package, with the exception of a rebate credited toward the
reduction of the Part B premium as stated in II.A.4(b); and

(b) MA Organization must:

(i) ensure Part B premium reductions are the same for all enrollees in a plan benefit package;

(ii) ensure that the total monthly rebate amount per enrollee is uniform across all
employer/union groups within the plan benefit package;

(iii) ensure that all rebates are accounted for and used only for the purposes provided in the
Act; and

(iv) retain documentation that supports the use of all of the rebates on a detailed basis for
each employer/union group within the plan benefit package and must provide access to this
documentation in accordance with the requirements of 42 CFR §422.501.

B. ENROLLMENT REQUIREMENTS

1. MA Organization agrees to restrict enrollment in an employer/union-only group health plan
to those individuals eligible for the employers/unions employment-based group coverage.

2. MA Organization will not be subject to the requirement to offer the employer/union-only
group health plan to all eligible beneficiaries residing in the plans service area as set forth in
42 CFR §422.50.

3. If an employer/union elects to enroll eligible individuals eligible for its
employer/union-only group health plan through a group enrollment process, MA Organization will not
be subject to the individual enrollment requirements set forth in 42 CFR §422.60. MA Organization
agrees that it will comply with all the requirements for group enrollment contained in CMS
guidance, including those requirements contained in Chapter 2 of the Medicare Managed Care Manual.

C. BENEFICIARY PROTECTIONS

1. Except as provided in II.C.2., CMS agrees that with respect to any employer/union-only
group health plans, MA Organization will not be subject to the prior review and approval of
marketing materials and election forms requirements set forth in 42 CFR Part 422 Subpart V. MA
Organization will be subject to all other disclosure requirements contained in 42 CFR §422.111 and
in CMS guidance, including those requirements contained in Chapter 9 of the Medicare Managed Care
Manual.

2. CMS agrees that the disclosure requirements set forth in 42 CFR §422.111 will not apply
with respect to any employer/union-only group health plan when the employer/union is subject to
alternative disclosure requirements (e.g., the Employee Retirement Income Security Act of 1974
(“ERISA”)) and fully complies with such alternative requirements. MA Organization agrees to comply
with the requirements for this waiver contained in employer/union-only group waiver guidance,
including those requirements contained in Chapter 9 of the Medicare Managed Care Manual.

 

25

 

D. SERVICE AREA

1. CMS agrees that Local employer/union-only group health plans that provide coverage to
individuals in any part of a State may offer coverage to individuals eligible for the
employer/union-only group throughout that State provided the MA Organization has properly
designated (in accordance with CMS operational requirements) its employer/union-only group service
areas in CMSs Health Plan Management System (HPMS) as
including those areas outside of its individual service area(s) to allow for enrollment of
these beneficiaries in CMS enrollment systems.

2. CMS agrees that those Local Coordinated Care Health Plans that provide coverage to
individuals in any part of a State can offer coverage to beneficiaries eligible for the
employer/union-only group plan that reside outside of the State provided:

(a) the MA Organization has properly designated (in accordance with CMS operational
requirements) its employer/union-only group service areas in CMSs Health Plan Management System
(HPMS) as including those areas outside of its individual State service area(s) to allow for
enrollment of these beneficiaries in CMS enrollment systems; and

(b) the MA Organization, either itself or through partnerships (i.e., arrangements) with other
MA Organizations, is able to meet CMS provider network adequacy requirements and provide consistent
benefits to those beneficiaries.

 

26

 

In witness whereof, the parties hereby execute this contract.

This document has been electronically signed by:

	 	 	 
	FOR THE MA ORGANIZATION
	 	 
	 
	 	 
	 

Contracting Official Name

	 	 
	 
	 	 
	 

Date

	 	 
	 
	 	 
	 

	 	 
	Organization

	 	Address
	 
	 	 
	FOR THE CENTERS FOR MEDICARE & MEDICAID SERVICES
	 	 
	 
	 	 
	 

	 	 
	 

	 	Date

 

27

 

EMPLOYER/UNION-ONLY GROUP ADDENDUM TO CONTRACT WITH

APPROVED ENTITY PURSUANT TO SECTIONS 1851 THROUGH 1859 AND 1860D-1

THROUGH 1860D-42 OF THE SOCIAL SECURITY ACT FOR THE OPERATION OF

A MEDICARE ADVANTAGE PRESCRIPTION DRUG PLAN

The Centers for Medicare & Medicaid Services (hereinafter referred to as “CMS”) and                     ,
a Medicare Advantage Organization (hereinafter referred to as the “MA Organization”) agree to amend
the contract
 _____ 

governing the MA Organizations operation of a Medicare Advantage plan described
in section 1851(a)(2)(A) or section 1851(a)(2)(C) of the Social Security Act (hereinafter referred
to as “the Act”), including all attachments, addenda, and amendments thereto, to include the
provisions contained in this Addendum (collectively hereinafter referred to as the “contract”),
under which the MA Organization shall offer Employer/Union-Only Group MA-PD Plans (hereinafter
referred to as “employer/union-only group MA-PDs”) in accordance with the waivers granted by CMS
under section 1857(i) of the Act. The terms of this Addendum shall only apply to MA-PD plans
offered by the MA Organization exclusively to eligible individuals enrolled in employment-based
health coverage under a contract between the MA Organization and the employer/union sponsor of the
employment-based health coverage.

This Addendum is made pursuant to Subparts K of 42 CFR Parts 422 and 423.

 

28

 

Article I.

EMPLOYER/UNION-ONLY GROUP MEDICARE ADVANTAGE PRESCRIPTION DRUG PLANS

A. MA Organization agrees to operate one or more employer/union-only group MA-PDs in accordance
with the Medicare Advantage contract (as modified by this Addendum), which incorporates in its
entirety the 2010 Application Instructions For Medicare Advantage Organizations To Offer New
Employer/Union-Only Group Waiver Plans (EGWPs) (released on January 6, 2009) and any
employer/union-only group waiver guidance, including, but not limited to those requirements
contained in Chapter 9 of the Medicare Managed Care Manual).

B. This Addendum is deemed to incorporate any changes that are required by statute to be
implemented during the term of the contract, and any regulations and policies implementing or
interpreting such statutory provisions.

C. In the event of any conflict between the employer/union-only group waiver guidance issued prior
to the execution of the contract and this Addendum, the provisions of this Addendum shall control.
In the event of any conflict between the employer/union-only group waiver guidance issued after the
execution of the contract and this Addendum, the provisions of the employer/union-only group
guidance shall control.

D. This Addendum is in no way intended to supersede or modify 42 CFR Parts 422 and 423 or sections
1851 through 1859 and 1860D-1 through D-43 of the Act, except as specifically provided in
applicable employer/union-only group waiver guidance and/or in this Addendum. Failure to reference
a statutory or regulatory requirement in this Addendum does not affect the applicability of such
requirement to the MA Organization and CMS.

E. The provisions of this Addendum apply to all employer/union-only group MA-PDs offered by MA
Organization under this contract number. In the event of any conflict between the provisions of
this Addendum and any other provision of the contract, the terms of this Addendum shall control.

Article II.

FUNCTIONS TO BE PERFORMED BY THE MEDICARE ADVANTAGE ORGANIZATION

A. PROVISION OF MA BENEFITS

1. MA Organization agrees to provide enrollees in each of its employer/union-only group MA-PDs
the basic benefits (hereinafter referred to as basic benefits) as required under 42 CFR §422.101
and, to the extent applicable, supplemental benefits under 42 CFR §422.102 and as established in
the MA Organizations final benefit and price bid proposal as approved by CMS.

2. The requirements in section 1852 of the Act and 42 CFR §422.100(c)(1) pertaining to the
offering of benefits covered under Medicare Part A and in section 1851 of the Act and 42 CFR
§422.50(a)(1) pertaining to who may enroll in an MA-PD are waived for employer/union-only group
MA-PD enrollees who are not entitled to Medicare Part A.

3. For employer/union-only group MA-PDs offering non-calendar year coverage, MA Organization
may determine basic and supplemental benefits (including deductibles, out-of-pocket limits, etc.)
on a non-calendar year basis subject to the following requirements:

(a) Applications, bids, and other submissions to CMS must be submitted on a calendar year
basis; and

(b) CMS payments will be determined on a calendar year basis.

 

29

 

4. For employer/union-only group MA-PDs that have a monthly beneficiary rebate described in 42
CFR §422.266:

(a) MA Organization may vary the form of rebate for a particular plan benefit package so that
the total monthly rebate amount may be credited differently for each employer/union group to whom
MA Organization offers the plan benefit package, with the exception of a rebate credited toward the
reduction of the Part B premium as stated in II.A.4(b); and

(b) MA Organization must:

(i) ensure Part B premium reductions are the same for all enrollees in a plan benefit package;

(ii) ensure that the total monthly rebate amount per enrollee is uniform across all
employer/union groups within the plan benefit package;

(iii) ensure that all rebates are accounted for and used only for the purposes provided in the
Act; and

(iv) Retain documentation that supports the use of all of the rebates on a detailed basis for
each employer/union group within the plan benefit package and must provide access to this
documentation for inspection or audit by CMS (or its designee) in accordance with the requirements
of 42 CFR 422.503(d) and 422.504(d) and (e).

5. MA Organization agrees it shall obtain written agreements from each employer/union that
provide that the employer/union may determine how much of an enrollees Part C monthly beneficiary
premium it will subsidize, subject to the restrictions set forth in II.A.5(a) through (c). MA
Organization agrees to retain these written agreements with employers/unions and must provide
access to this documentation for inspection or audit by CMS (or its designee) in accordance with
the requirements of 42 CFR 422.503(d) and 422.504(d) and (e)

(a) The employer/union can subsidize different amounts for different classes of enrollees in
the employer group health plan provided such classes are reasonable and based on objective business
criteria, such as years of service, date of retirement, business location, job category, and nature
of compensation (e.g., salaried v. hourly).

(b) The employer/union cannot vary the premium subsidy for individuals within a given class of
enrollees.

(c) The employer/union cannot charge an enrollee for coverage provided under the employer
group health plan more than the sum of his or her monthly beneficiary premium attributable to basic
benefits provided under the plan as defined in 42 CFR §422.2 (i.e., all Medicare-covered benefits,
except hospice services) and 100% of the monthly beneficiary premium attributable to his or her
non-Medicare Part C benefits (if any). MA Organization must pass through the monthly payments
described under 42 CFR 422.304(a) received from CMS to reduce the amount that the enrollee pays
(or, in those instances where the subscriber to or participant in the employer plan pays premiums
on behalf of a Medicare eligible spouse or dependent, the amount the subscriber or participant
pays).

B. PROVISION OF PRESCRIPTION DRUG BENEFITS

1. (a) Except as provided in II.B.1(b), MA Organization agrees to provide basic prescription
drug coverage, as defined under 42 CFR §423.100, under any employer/union-only group MA-PD, in
accordance with Subpart C of 42 CFR Part 423.

(b) CMS agrees that MA Organization will not be subject to the actuarial equivalence
requirement set forth in 42 CFR §423.104(e)(5) with respect to any employer/union-only group MA-PD
and may provide less than the defined standard coverage between the deductible and initial coverage
limit. MA Organization agrees that its basic prescription drug coverage under any
employer/union-only group MA-PD will satisfy all of the other actuarial equivalence standards set
forth in 42 CFR §423.104, including but not limited to the requirement set
forth in 42 CFR §423.104(e)(3) that the plan has a total or gross value that is at least equal
to the total or gross value of defined standard coverage.

 

30

 

(c) CMS agrees that nothing in this Addendum prevents MA Organization from offering benefits
in addition to basic prescription drug coverage to employers/unions. Such additional benefits
offered pursuant to private agreements between MA Organization and employers/unions will be
considered non-Medicare Part D benefits (non-Medicare Part D benefits). MA Organization agrees that
such additional benefits may not reduce the value of basic prescription drug coverage (e.g.,
additional benefits cannot impose a cap that would preclude enrollees from realizing the full value
of such basic prescription drug coverage).

(d) MA Organization agrees that enrollees of employer/union-only group MA-PDs shall not be
charged more than the sum of his or her monthly beneficiary premium attributable to basic
prescription drug coverage and 100% of the monthly beneficiary premium attributable to his or her
non-Medicare Part D benefits (if any). MA Organization must pass through the direct subsidy
payments received from CMS to reduce the amount that the beneficiary pays (or, in those instances
where the subscriber to or participant in the employer plan pays premiums on behalf of an eligible
spouse or dependent, the amount the subscriber or participant pays).

(e) MA Organization agrees that any additional non-Medicare Part D benefits offered to an
employer/union will always pay primary to the subsidies provided by CMS to low-income individuals
under Subpart P of 42 CFR Part 423 (the Low-Income Subsidy).

2. MA Organization agrees enrollees of employer/union-only group MA-PDs will not be permitted
to make payment of premiums under 42 CFR §423.293(a) through withholding from the enrollees Social
Security, Railroad Retirement Board, or Office of Personnel Management benefit payment.

3. MA Organization agrees it shall obtain written agreements from each employer/union that
provide that the employer/union may determine how much of an enrollees Part D monthly beneficiary
premium it will subsidize, subject to the restrictions set forth in II.B.3(a) through (g). MA
Organization agrees to retain these written agreements with employers/unions, including any written
agreements related to items (d) through (f), and must provide access to this documentation for
inspection or audit by CMS (or its designee) in accordance with the requirements of 42 CFR
423.504(d) and 423.505(d) and (e)

(a) The employer/union can subsidize different amounts for different classes of enrollees in
the employer/union-only group MA-PD provided such classes are reasonable and based on objective
business criteria, such as years of service, date of retirement, business location, job category,
and nature of compensation (e.g., salaried v. hourly). Different classes cannot be based on
eligibility for the Low Income Subsidy.

(b) The employer/union cannot vary the premium subsidy for individuals within a given class of
enrollees.

(c) The employer/union cannot charge an enrollee for prescription drug coverage provided under
the plan more than the sum of his or her monthly beneficiary premium attributable to basic
prescription drug coverage and 100% of the monthly beneficiary premium attributable to his or her
non-Medicare Part D benefits (if any). The employer/union must pass through direct subsidy payments
received from CMS to reduce the amount that the beneficiary pays (or, in those instances where the
subscriber to or participant in the employer plan pays premiums on behalf of an eligible spouse or
dependent, the amount the subscriber or participant pays).

(d) For all enrollees eligible for the Low Income Subsidy, the low income premium subsidy
amount will first be used to reduce any portion of the MA-PD monthly beneficiary premium paid by
the enrollee (or in those instances where the subscriber to or participant in the employer plan
pays premiums on behalf of a low-income eligible spouse or dependent, the amount the subscriber or
participant pays), with any remaining portion of the premium subsidy amount then applied toward any
portion of the MA-PD monthly beneficiary premium (including any MA premium) paid by the
employer/union. However, if the sum of the enrollees MA-PD monthly premium (or the
subscribers/participants MA-PD monthly premium, if applicable) and the employers/unions MA-PD
monthly premiums (i.e., total monthly premium) are less than the monthly low-income premium subsidy
amount, any portion of the low-income subsidy premium amount above the total MA-PD monthly
premium must be returned directly to CMS. Similarly, if there is no MA-PD monthly premium charged
the beneficiary (or subscriber/participant, if applicable) or employer/union, the entire low-income
premium subsidy amount must be returned directly to CMS and cannot be retained by the MA
Organization, the employer/union, or the beneficiary (or the subscriber/participant, if
applicable).

 

31

 

(e) If the Part D sponsor does not or cannot directly bill an employer groups beneficiaries,
CMS will permit the Part D sponsor to directly refund the amount of the low-income premium subsidy
to the LIS beneficiary. This refund must meet the above requirements concerning beneficiary premium
contributions; specifically, that the amount of the refund not exceed the amount of the monthly
premium contribution by the enrollee and/or the employer. In addition, the sponsor must refund
these amounts to the beneficiary within a reasonable time period. However, under no circumstances
may this time period exceed forty five (45) days from the date that the Part D sponsor receives the
low-income premium subsidy amount payment for that beneficiary from CMS.

(f) The MA Organization and the employer/union may agree that the employer/union will be
responsible for reducing up-front the MA-PD premium contribution required for enrollees eligible
for the Low Income Subsidy. In those instances where the employer/union is not able to reduce
up-front the MA-PD premiums paid by the enrollee (or, the subscriber/participant, if applicable),
the MA Organization and the employer/union may agree that the employer/union shall directly refund
to the enrollee (or subscriber/participant, if applicable) the amount of the low-income premium
subsidy up to the MA-PD monthly premium contribution previously collected from the enrollee (or
subscriber/participant, if applicable). The employer/union is required to complete the refund on
behalf of the MA Organization within forty-five (45) days of the date the MA Organization receives
from CMS the low-income premium subsidy amount payment for the low-income subsidy eligible
enrollee.

(g) If the low income premium subsidy amount for which an enrollee is eligible is less than
the portion of the Part D monthly beneficiary premium paid by the enrollee (or
subscriber/participant, if applicable), then the employer/union should communicate to the enrollee
(or subscriber/participant) the financial consequences of the low-income subsidy eligible
individual enrolling in the employer/union-only group MA-PD as compared to enrolling in another
Part D plan with a monthly beneficiary premium equal to or below the low income premium subsidy
amount.

4. For non-calendar year employer/union-only group MA-PDs, MA Organization may determine
benefits (including deductibles, out-of-pocket limits, etc.) on a non-calendar year basis subject
to the following requirements:

(a) Applications, formularies, bids and other submissions to CMS must be submitted on a
calendar year basis;

(b) The prescription drug coverage under the employer/union-only group MA-PD must be at least
actuarially equivalent to defined standard coverage for the portion of its plan year that falls in
a given calendar year. An employer/union-only group MA-PD will meet this standard if its
prescription drug coverage is at least actuarially equivalent for the calendar year in which the
plan year starts and no design change is made for the remainder of the plan year. In no event can
MA Organization increase during the plan year the annual out-of-pocket threshold;

(c) After an enrollees incurred costs exceed the annual out-of-pocket threshold, the
employer/union-only group MA-PD must provide coverage that is at least actuarially equivalent to
that provided under standard prescription drug coverage; eligibility for such coverage can be
determined on a plan year basis.

5. PDP Sponsor agrees to administer for its prescription drug plan members at point-of-sale
the Medicare Coverage Gap Discount authorized by section 1860D-14A of the Social Security Act (the
Act).

 

32

 

C. ENROLLMENT REQUIREMENTS

1. MA Organization agrees to restrict enrollment in an employer/union-only group MA-PD to
those individuals eligible for the employers/unions employment-based group coverage.

2. MA Organization will not be subject to the requirement to offer the employer/union-only
group MA-PD to all Medicare eligible beneficiaries residing in its service area as set forth in 42
CFR §422.50.

3. If an employer/union elects to enroll eligible individuals eligible for its
employer/union-only group MA-PDs through a group enrollment process, MA Organization will not be
subject to the individual enrollment requirements set forth in 42 CFR §422.60. MA Organization
agrees that it will comply with all the requirements for group enrollment contained in CMS
guidance, including those requirements contained in Chapter 2 of the Medicare Managed Care Manual.

D. BENEFICIARY PROTECTIONS

1. Except as provided in II.D.2., CMS agrees that, with respect to any employer/union-only
group MA-PDs, MA Organization will not be subject to the information requirements set forth in 42
CFR §423.48 and the prior review and approval of marketing materials and election forms
requirements set forth in 42 CFR §422.80 and §423.50. MA Organization will be subject to all other
disclosure and dissemination requirements contained in 42 CFR §422.111, §423.128 and in CMS
guidance, including those requirements contained in Chapter 9 of the Medicare Managed Care Manual.

2. CMS agrees that the disclosure and dissemination requirements set forth in 42 CFR §422.111
and §423.128 will not apply with respect to any employer/union-only group MA-PD when the
employer/union is subject to alternative disclosure requirements (e.g., the Employee Retirement
Income Security Act of 1974 (ERISA)) and fully complies with such alternative requirements. MA
Organization agrees to comply with the requirements for this waiver contained in
employer/union-only group waiver guidance, including those requirements contained in Chapter 9 of
the Medicare Managed Care Manual.

3. CMS agrees that with respect to any employer/union-only group MA-PDs, MA Organization will
not be subject to the Part D beneficiary customer service call center hour and performance
requirements. MA Organization agrees to operate beneficiary customer service call center hours for
any employer/union-only group MA-PDs that ensure a sufficient mechanism is available to respond to
beneficiary inquiries and provide customer service call center services to these members during
normal business hours. However, MA Organization agrees that CMS may review the adequacy of these
call center hours and potentially require expanded beneficiary customer service call center hours
in the event of beneficiary complaints or for other reasons in order to ensure that the customer
service call center hours are sufficient to meet the needs of its enrollee population.

E. SERVICE AREA, FORMULARIES AND PHARMACY ACCESS

1. CMS agrees that Local employer/union-only group MA-PDs that provide coverage to individuals
in any part of a State may offer coverage to retirees eligible for the employer/union-only group
MA-PD throughout that State provided the MA Organization has properly designated (in accordance
with CMS operational requirements) its employer/union-only group service areas in CMSs Health Plan
Management System (HPMS) as including those areas outside of its individual service area(s) to
allow for enrollment of these beneficiaries in CMS enrollment systems. CMS also agrees that
employer/union-only group Regional MA-PDs that provide coverage to individuals in any part of a
Region can offer coverage to retirees eligible for the employer/union-only group MA-PD throughout
that Region.

2. CMS agrees that those Local Coordinated Care Health MA-PDs that provide coverage to
individuals in any part of a State can offer coverage to beneficiaries eligible for the
employer/union-only group plan that reside outside of the State provided:

(a) the MA Organization has properly designated (in accordance with CMS operational
requirements) its employer/union-only group service areas in CMSs Health Plan Management System
(HPMS) as
including those areas outside of its individual State service area(s) to allow for enrollment
of these beneficiaries in CMS enrollment systems; and

 

33

 

(b) the MA Organization, either itself or through partnerships (i.e., arrangements) with other
MA Organizations, is able to meet CMS provider network adequacy requirements and provide consistent
benefits to those beneficiaries.; or

(c) the MA Organization will be afforded a limited flexibility in a portion of an expanded
employer/union-only group service area outside a State where it is unable to secure contracts with
an adequate number of network providers to satisfy CMS MA coordinated care network adequacy
requirements that otherwise would apply. As a condition of receiving this waiver, the MA
Organization agrees to meet each of the following requirements:

(1) The MA Organization must be able to meet CMS MA coordinated care network adequacy
requirements for at least the majority of a particular employer or union groups beneficiaries
enrolled in the 800 series coordinated care plan. In those instances where the MA Organization
cannot meet this requirement for a particular employer or union groups beneficiaries, CMS will
require information, including MA network adequacy information for the particular employer or union
group, to be submitted for review and approval by CMS;

(2) All of an employer or union groups beneficiaries, including those beneficiaries that do
not have access to contracted MA network providers, must receive the same covered benefits, at the
preferred in-network cost sharing for all covered benefits offered by the coordinated care plan;

(3) The MA Organization must provide payment to noncontract providers in accordance with the
requirements of 1852(a)(2)(A) of the Social Security Act (i.e., the MA Organization must provide
payment in an amount so that (i) the sum of such payment amount and any cost sharing provided under
the plan is equal to at least (ii) the total dollar amount of payment for such items and services
as would otherwise be authorized under parts A and B (including any balance billing under such
parts [emphasis added])). Note that, unlike private fee-for-service MA plans, MA Organizations
offering local coordinated care plans have the ability to pay more than the required
above-mentioned statutory amounts to any particular noncontract provider (See also 42 CFR 422.214;
and 42 CFR 489.53(a)(2) (hospitals and other institutional providers with Original Medicare
fee-for-service provider agreements that place certain restrictions on treating any Medicare
beneficiaries may be subject to having those agreements terminated by CMS));

(4) The MA Organization must take whatever steps are necessary to ensure that beneficiaries
residing in areas where the MA Organization is unable to secure contracts with an adequate number
of a specific type of provider(s) to satisfy CMS MA network adequacy requirements will have access
to providers, including providing assistance to these beneficiaries in locating providers and/or
utilizing its ability, as outlined above, to pay noncontract providers more than the statutory
minimum required in section 1852(a)(2)(A) of the Social Security Act;

(5) In addition to assisting enrollees residing in non-network areas of the local coordinated
care plan in finding providers who will furnish services, the MA Organization must also establish a
program to specifically assist these enrollees in the coordination of their health care service.
Areas that should be addressed in its coordination plan for its non-network enrollees are discussed
in section 120.3 of Chapter 4 of the Medicare Managed Care Manual; and

(6) In order to minimize any adverse effects on beneficiaries residing in areas where the MA
Organization is unable to satisfy CMS MA network adequacy requirements, the MA Organization also
must have in place an effective communication plan with employer groups prior to transitioning
these employer group beneficiaries to the local coordinated care plan. This must include the
following key communications: (a) ensure employer sponsors and their beneficiaries understand how
the plan will work for those enrollees residing in areas where MA network providers are not
available, including that noncontract providers are generally not required to accept the plan and
furnish services; (b) ensure the MA Organization has a targeted communication strategy and provides
information and assistance for beneficiaries affected by lack of access to network providers (i.e.,
whom they contact if they have difficulties locating a provider that will furnish services, etc);
(c) conduct targeted
education and outreach to the current providers of beneficiaries affected by lack of access to
network providers prior to transitioning the group to the local coordinated care plan, explaining
how the local coordinated care employer group product works, how claims are submitted, etc.; and
(d) assure all noncontract providers that they will receive prompt and accurate payment.

 

34

 

3. CMS agrees that non-network Private Fee-for-Service employer/union-only group MA-PDs may
offer coverage beyond their designated individual service areas to all enrollees of a particular
employer/union-only group plan, regardless of where they reside in the nation, provided the MA
Organization has properly designated (in accordance with CMS operational requirements) its
employer/union-only group service area in CMS HPMS as including areas outside of its individual
plan service area(s) to allow for the enrollment of these beneficiaries in CMS enrollment systems.

4. MA Organization agrees to utilize, as the formulary for any employer/union-only group
MA-PD, a base formulary that has received approval from CMS, in accordance with CMS formulary
guidance, for use in a non-group MA-PD offered by MA Organization. Except as set forth in 42 CFR
§423.120(b) and sub-regulatory guidance, MA Organization may not modify the approved base formulary
used for any employer/union-only group MA-PD by removing drugs, adding additional utilization
management restrictions, or increasing the cost-sharing status of a drug from the base formulary.
Enhancements that are permitted to the base formulary include adding additional drugs, removing
utilization management restrictions, and improving the cost-sharing status of drugs.

5. For any employer/union-only group MA-PD, MA Organization agrees to provide Part D benefits
in the plans service area utilizing a pharmacy network and formulary that meets the requirements of
42 CFR §423.120, with the following exception: CMS agrees that the retail pharmacy access
requirements set forth in 42 CFR §423.120(a)(1) will not apply when the employer/union-only group
MA-PDs pharmacy network is sufficient to meet the needs of its enrollees throughout the
employer/union-only group MA-PDs service area, as determined by CMS. CMS may periodically review
the adequacy of the employer/union-only group MA-PDs pharmacy network and require the
employer/union-only group MA-PD to expand access if CMS determines that such expansion is necessary
in order to ensure that the employer/union-only group MA-PDs network is sufficient to meet the
needs of its enrollees.

F. PAYMENT TO MA ORGANIZATION

Except as provided in II.F.1 through 4, payment under this Addendum will be governed by the rules
of Subparts G and 3 of 42 CFR Part 423.

1. MA Organization acknowledges that the risk sharing, plan entry and retention bonus
provisions of section 1858 of the Act and 42 CFR §422.458 shall not apply to any
employer/union-only group Regional MA-PDs.

2. MA Organization acknowledges that the risk-sharing payment adjustment described in 42 CFR
§423.336 is not applicable for any employer/union-only group MA-PD enrollee.

3. MA Organization is not required to submit a Part D bid and will receive a monthly direct
subsidy under 42 CFR Subpart G for each employer/union-only group MA-PD enrollee equal to the
amount of the national average monthly bid amount (not its approved standardized bid), adjusted for
health status (as determined under 42 CFR §423.329(b)(1)) and reduced by the base beneficiary
premium for the employer/union-only group MA-PD, as adjusted under 42 CFR §423.286(d)(3), if
applicable. The further adjustments to the base beneficiary premium contained in 42 CFR
§423.286(d)(1) and (2) will not apply.

4. MA Organization will not receive monthly reinsurance payment or low-income cost-sharing
subsidy amounts in the manner set forth in 42 CFR §423.329(c)(2)(i) and 42 CFR §423.329(d)(2)(i)
for any employer/union-only group MA-PD enrollee, but instead will receive the full reinsurance and
low-income cost-sharing subsidy payments following the end of year reconciliation as described in
42 CFR §423.329(c)(2)(ii) and 42 CFR §423.329(d)(2)(ii) respectively.

 

35

 

5. For non-calendar year plans:

(a) CMS payments will be determined on a calendar year basis;

(b) Low income subsidy payments and reconciliations will be determined based on the calendar
year for which the payments are made; and

(c) MA Organization acknowledges that it will not receive reinsurance payments under 42 CFR
§423.329(c).

G. MA-PD SPONSOR REIMBURSEMENT TO PHARMACIES

1. If an MA-PD Sponsor uses a standard for reimbursement of pharmacies based on the cost of a
drug, MA-PD Sponsor will update such standard not less frequently than once every 7 days, beginning
with an initial update on January 1 of each year, to accurately reflect the market price of the
drug.

2. MA-PD Sponsor will issue, mail, or otherwise transmit payment with respect to all claims
submitted by pharmacies (other than pharmacies that dispense drugs by mail order only, or are
located in, or contract with, a long-term care facility) within 14 days of receipt of an
electronically submitted claim or within 30 days of receipt of a claim submitted otherwise.

3. MA-PD Sponsor must ensure that a pharmacy located in, or having a contract with, a
long-term care facility will have not less than 30 days (but not more than 90 days) to submit
claims to MA-PD Sponsor for reimbursement.

H. Public Health Service Act

Pursuant to section 13112 of the American Recovery and Reinvestment Act of 2009 (ARRA), the MA-PD
Sponsor agrees that as it implements, acquires, or upgrades its health information technology
systems, it shall utilize, where available, health information technology systems and products that
meet standards and implementation specifications adopted under section 3004 of the Public Health
Service Act, as amended by section 13101 of the ARRA.

 

36

 

In witness whereof, the parties hereby execute this contract.

This document has been electronically signed by:

	 	 	 
	FOR THE MA ORGANIZATION
	 	 
	 
	 	 
	 

Contracting Official Name

	 	 
	 
	 	 
	 

Date

	 	 
	 
	 	 
	 

	 	 
	Organization

	 	Address
	 
	 	 
	FOR THE CENTERS FOR MEDICARE & MEDICAID SERVICES
	 	 
	 
	 	 
	 

	 	 
	 

	 	Date
	 
	 	 
	 

	 	 
	 

	 	Date

 

37

 

ADDENDUM TO MEDICARE MANAGED CARE CONTRACT PURSUANT TO

SECTIONS 1860D-1 THROUGH 1860D-42 OF THE SOCIAL SECURITY ACT FOR

THE OPERATION OF A VOLUNTARY MEDICARE PRESCRIPTION DRUG PLAN

The Centers for Medicare & Medicaid Services (hereinafter referred to as “CMS”) and                     ,
a Medicare managed care organization (hereinafter referred to as the MA-PD Sponsor) agree to amend
the contract
 _____ 

governing the MA-PD Sponsors operation of a Part C plan described in Section
1851(a)(2)(A) of the Social Security Act (hereinafter referred to as “the Act”) or a Medicare cost
plan to include this addendum under which the MA-PD Sponsor shall operate a Voluntary Medicare
Prescription Drug Plan pursuant to sections 1860D-1 through 1860D-42 (with the exception of section
1860D-22 and 1860D-31) of the Act.

This addendum is made pursuant to Subpart L of 42 CFR Part 417 (in the case of cost plan sponsors
offering a Part D benefit) and Subpart K of 42 CFR Part 422 (in the case of an MA-PD Sponsor
offering a Part C plan).

NOTE: For purposes of this addendum, unless otherwise noted, reference to an “MA-PD Sponsor” or
“MA-PD Plan” is deemed to include a cost plan sponsor or a MA private fee-for-service contractor
offering a Part D benefit.

 

38

 

Article I.

Medicare Voluntary Prescription Drug Benefit

A. The MA-PD Sponsor agrees to operate one or more Medicare Voluntary Prescription Drug Plans as
described in its application and related materials, including but not limited to all the
attestations contained therein and all supplemental guidance, for Medicare approval and in
compliance with the provisions of this addendum, which incorporates in its entirety the
Solicitation For Applications for New Medicare Advantage Prescription Drug Plan (MA-PD)
Sponsors, released on January 5, 2010 [applicable to Medicare Part C contractors] or the
Solicitation for Applications for New Cost Plan Sponsors, released on January 5, 2010
[applicable to Medicare cost plan contractors] (hereinafter collectively referred to as “the
addendum”). The MA-PD Sponsor also agrees to operate in accordance with the regulations at 42 CFR
Part 423 (with the exception of Subparts Q, R, and S), sections 1860D-1 through 1860D-43 (with the
exception of sections 1860D-22(a) and 1860D-31) of the Social Security Act, and the applicable
solicitation identified above, as well as all other applicable Federal statutes, regulations, and
policies. This addendum is deemed to incorporate any changes that are required by statute to be
implemented during the term of this addendum and any regulations or policies implementing or
interpreting such statutory provisions.

B. CMS agrees to perform its obligations to the MA-PD Sponsor consistent with the regulations at 42
CFR Part 423 (with the exception of Subparts Q, R, and S), sections 1860D-1 through 1860D-43 (with
the exception of sections 1860D-22(a) and 1860D-31) of the Social Security Act, and the applicable
solicitation, as well as all other applicable Federal statutes, regulations, and policies.

C. CMS agrees that it will not implement, other than at the beginning of a calendar year,
regulations under 42 CFR Part 423 that impose new, significant regulatory requirements on the MA-PD
Sponsor. This provision does not apply to new requirements mandated by statute.

D. This addendum is in no way intended to supersede or modify 42 CFR, Parts 417, 422 or 423.
Failure to reference a regulatory requirement in this addendum does not affect the applicability of
such requirements to the MA-PD Sponsor and CMS.

Article II.

Functions to be Performed by the MA-PD Sponsor

A. ENROLLMENT

1. MA-PD Sponsor agrees to enroll in its MA-PD plan only Part D-eligible beneficiaries as they
are defined in 42 CFR §423.30(a) and who have elected to enroll in MA-PD Sponsors Part C or Section
1876 benefit.

2. If the MA-PD Sponsor is a cost plan sponsor, the MA-PD Sponsor acknowledges that its
Section 1876 plan enrollees are not required to elect enrollment in its Part D plan.

B. PRESCRIPTION DRUG BENEFIT

1. MA-PD Sponsor agrees to provide the required prescription drug coverage as defined under 42
CFR §423.100 and, to the extent applicable, supplemental benefits as defined in 42 CFR §423.100 and
in accordance with Subpart C of 42 CFR Part 423. MA-PD Sponsor also agrees to provide Part D
benefits as described in the MA-PD Sponsors Part D bid(s) approved each year by CMS (and in the
Attestation of Benefit Plan and Price, attached hereto).

2. MA-PD Sponsor agrees to calculate and collect beneficiary Part D premiums in accordance
with 42 CFR §§423.286 and 423.293.

3. If the MA-PD Sponsor is a cost plan sponsor, it acknowledges that its Part D benefit is
offered as an optional supplemental service in accordance with 42 CFR §417.440(b)(2)(ii).

4. MA-PD Sponsor agrees to administer for its prescription drug plan members at point-of-sale
the Medicare Coverage Gap Discount authorized by section 1860D-14A of the Social Security Act (“the
Act”).

 

39

 

C. DISSEMINATION OF PLAN INFORMATION

1. MA-PD Sponsor agrees to provide the information required in 42 CFR §423.48.

2. MA-PD Sponsor agrees to disclose information related to Part D benefits to beneficiaries in
the manner and the form specified by CMS under 42 CFR §§423.128 and 423 Subpart V and in the
“Marketing Materials Guidelines for Medicare Advantage-Prescription Drug Plans (MA-PDs) and
Prescription Drug Plans (PDP5),” and agrees to comply with requirements in 42 CFR 423 Subpart V
requiring approval of certain marketing materials prior to distribution.

3. MA-PD Sponsor certifies that all materials it submits to CMS under the File and Use
Certification authority described in the Marketing Materials Guidelines are accurate, truthful, not
misleading, and consistent with CMS marketing guidelines.

D. QUALITY ASSURANCE/UTILIZATION MANAGEMENT

MA-PD Sponsor agrees to operate quality assurance, cost, and utilization management, medication
therapy management programs, and support electronic prescribing in accordance with Subpart D of 42
CFR Part 423.

E. APPEALS AND GRIEVANCES

MA-PD Sponsor agrees to comply with all requirements in Subpart M of 42 CFR Part 423 governing
coverage determinations, grievances and appeals, and formulary exceptions. MA-PD Sponsor
acknowledges that these requirements are separate and distinct from the appeals and grievances
requirements applicable to the MA-PD Sponsor through the operation of its Part C or cost plan
benefits.

F. PAYMENT TO MA-PD SPONSOR

MA-PD Sponsor and CMS agree that payment paid for Part D services under the addendum will be
governed by the rules in Subpart G of 42 CFR Part 423.

G. BID SUBMISSION AND REVIEW

If the MA-PD Sponsor intends to participate in the Part D program for the future year, MA-PD
Sponsor agrees to submit a future years Part D bid, including all required information on premiums,
benefits, and cost-sharing, by the applicable due date, as provided in Subpart F of 42 CFR Part 423
so that CMS and the MA-PD Sponsor may conduct negotiations regarding the terms and conditions of
the proposed bid and benefit plan renewal. MA-PD Sponsor acknowledges that failure to submit a
timely bid under this section may affect the sponsors ability to offer a Part C plan, pursuant to
the provisions of 42 CFR §422.4(c).

H. COORDINATION WITH OTHER PRESCRIPTION DRUG COVERAGE

1. MA-PD Sponsor agrees to comply with the coordination requirements with State Pharmacy
Assistance Programs (SPAPs) and plans that provide other prescription drug coverage as described in
Subpart 3 of 42 CFR Part 423.

2. MA-PD Sponsor agrees to comply with Medicare Secondary Payer procedures as stated in 42 CFR
§423.462.

 

40

 

I. SERVICE AREA AND PHARMACY ACCESS

1. The MA-PD Sponsor agrees to provide Part D benefits in the service area for which it has
been approved by CMS to offer Part C or cost plan benefits utilizing a pharmacy network and
formulary approved by CMS that meet the requirements of 42 CFR §423.120.

2. The MA-PD Sponsor agrees to ensure adequate access to Part D-covered drugs at
out-of-network pharmacies according to 42 CFR §423.124.

3. MA-PD Sponsor agrees to provide benefits by means of point-of-service systems to adjudicate
prescription drug claims in a timely and efficient manner in compliance with CMS standards, except
when necessary to provide access in underserved areas, I/T/U pharmacies (as defined in 42 CFR
§423.100), and long-term care pharmacies (as defined in 42 CFR §423.100).

4. MA-PD Sponsor agrees to contract with any pharmacy that meets the MA-PD Sponsors reasonable
and relevant standard terms and conditions. If MA-PD Sponsor has demonstrated that it historically
fills 98% or more of its enrollees prescriptions at pharmacies owned and operated by the MA-PD
Sponsor (or presents compelling circumstances that prevent the sponsor from meeting the 98%
standard or demonstrates that its Part D plan design will enable the sponsor to meet the 98%
standard during the contract year), this provision does not apply to MA-PD Sponsors plan.

5. The provisions of 42 CFR §423.120(a) concerning the TRICARE retail pharmacy access standard
do not apply to MA-PD Sponsor if the Sponsor has demonstrated to CMS that it historically fills
more than 50% of its enrollees prescriptions at pharmacies owned and operated by the MA-PD Sponsor.
MA-PD Sponsors excused from meeting the TRICARE standard are required to demonstrate retail
pharmacy access that meets the requirements of 42 CFR §422.112 for a Part C contractor and 42 CFR
§417.416(e) for a cost plan contractor.

J. COMPLIANCE PROGRAM/PROGRAM INTEGRITY

MA-PD Sponsor agrees that it will develop and implement a compliance program that applies to its
Part D-related operations, consistent with 42 CFR §423.504(b)(4)(vi).

K. LOW-INCOME SUBSIDY

MA-PD Sponsor agrees that it will participate in the administration of subsidies for low-income
individuals according to Subpart P of 42 CFR Part 423.

L. BENEFICIARY FINANCIAL PROTECTIONS

The MA-PD Sponsor agrees to afford its enrollees protection from liability for payment of fees that
are the obligation of the MA-PD Sponsor in accordance with 42 CFR §423.505(g).

M. RELATIONSHIP WITH FIRST TIER, DOWNSTREAM, AND RELATED ENTITIES

1. The MA-PD Sponsor agrees that it maintains ultimate responsibility for adhering to and
otherwise fully complying with all terms and conditions of this addendum.

2. The MA-PD Sponsor shall ensure that any contracts or agreements with first tier,
downstream, and related entities performing functions on the MA-PD Sponsors behalf related to the
operation of the Part D benefit are in compliance with 42 CFR §423.505(i).

 

41

 

N. CERTIFICATION OF DATA THAT DETERMINE PAYMENT

MA-PD Sponsor must provide certifications in accordance with 42 CFR §423.505(k). 0. MA-PD SPONSOR
REIMBURSEMENT TO PHARMACIES

1. If an MA-PD Sponsor uses a standard for reimbursement of pharmacies based on the cost of a
drug, MA-PD Sponsor will update such standard not less frequently than once every 7 days, beginning
with an initial update on January 1 of each year, to accurately reflect the market price of the
drug.

2. MA-PD Sponsor will issue, mail, or otherwise transmit payment with respect to all claims
submitted by pharmacies (other than pharmacies that dispense drugs by mail order only, or are
located in, or contract with, a long-term care facility) within 14 days of receipt of an
electronically submitted claim or within 30 days of receipt of a claim submitted otherwise.

3. MA-PD Sponsor must ensure that a pharmacy located in, or having a contract with, a
long-term care facility will have not less than 30 days (but not more than 90 days) to submit
claims to MA-PD Sponsor for reimbursement.

Article III.

Record Retention and Reporting Requirements

A. MAINTENANCE OF RECORDS

MA-PD Sponsor agrees to maintain records and provide access in accordance with 42 CFR §§ 423.505
(b)(10) and 423.505(i)(2).

B. GENERAL REPORTING REQUIREMENTS

The MA-PD Sponsor agrees to submit to information to CMS according to 42 CFR §§423.505(f), 423.514,
and the “Final Medicare Part D Reporting Requirements,” a document issued by CMS and subject to
modification each program year.

C. CMS LICENSE FOR USE OF PLAN FORMULARY

MA-PD Sponsor agrees to submit to CMS each plan’s formulary information, including any changes to
its formularies, and hereby grants to the Government, and any person or entity who might receive
the formulary from the Government, a non-exclusive license to use all or any portion of the
formulary for any purpose related to the administration of the Part D program, including without
limitation publicly distributing, displaying, publishing or reconfiguration of the information in
any medium, including www.medicare.gov, and by any electronic, print or other means of
distribution.

Article IV.

HIPAA Transactions/Privacy/Security

A. MA-PD Sponsor agrees to comply with the confidentiality and enrollee record accuracy
requirements specified in 42 CFR §423.136.

1. MA-PD Sponsor agrees to enter into a business associate agreement with the entity with
which CMS has contracted to track Medicare beneficiaries true out-of-pocket costs.

Article V.

Addendum Term and Renewal

A. TERM OF ADDENDUM

This addendum is effective from the date of CMS authorized representatives signature through
December 31, 2011. This addendum shall be renewable for successive one-year periods thereafter
according to 42 CFR §423.506.

 

42

 

B. QUALIFICATION TO RENEW ADDENDUM

1. In accordance with 42 CFR §423.507, the MA-PD Sponsor will be determined qualified to renew
this addendum annually only if

(a) The MA-PD Sponsor has not provided CMS with a notice of intention not to renew in
accordance with Article VII of this addendum, and

(b) CMS has not provided the MA-PD Sponsor with a notice of intention not to renew.

2. Although MA-PD Sponsor may be determined qualified to renew its addendum under this
Article, if the MA-PD Sponsor and CMS cannot reach agreement on the Part D bid under Subpart F of
42 CFR Part 423, no renewal takes place, and the failure to reach agreement is not subject to the
appeals provisions in Subpart N of 42 CFR Parts 422 or 423. (Refer to Article X for consequences of
non-renewal on the Part C contract and the ability to enter into a Part C contract.)

Article VI.

Nonrenewal of Addendum

A. NONRENEWAL BY THE MA-PD SPONSOR

1. MA-PD Sponsor may non-renew this addendum in accordance with 42 CFR 423.507(a).

2. If the MA-PD Sponsor non-renews this addendum under this Article, CMS cannot enter into a
Part D addendum with the organization for 2 years unless there are special circumstances that
warrant special consideration, as determined by CMS.

B. NONRENEWAL BY CMS

CMS may non-renew this addendum under the rules of 42 CFR 423.507(b). (Refer to Article X for
consequences of non-renewal on the Part C contract and the ability to enter into a Part C
contract.)

Article VII.

Modification or Termination of Addendum by Mutual Consent

This addendum may be modified or terminated at any time by written mutual consent in accordance
with 42 CFR 423.508. (Refer to Article X for consequences of non-renewal on the Part C contract and
the ability to enter into a Part C contract.)

Article VIII.

Termination of Addendum by CMS

CMS may terminate this addendum in accordance with 42 CFR 423.509. (Refer to Article X for
consequences of non-renewal on the Part C contract and the ability to enter into a Part C
contract.)

Article IX.

Termination of Addendum by the MA-PD Sponsor

A. The MA-PD Sponsor may terminate this addendum only in accordance with 42 CFR 423.510.

B. CMS will not enter into a Part D addendum with an organization that has terminated its addendum
within the preceding 2 years unless there are circumstances that warrant special consideration, as
determined by CMS.

C. If the addendum is terminated under section A of this Article, the MA-PD Sponsor must ensure the
timely transfer of any data or files. (Refer to Article X for consequences of non-renewal on the
Part C contract and the ability to enter into a Part C contract.)

D. If the addendum is terminated under section A of this Article, CMS cannot enter into a contract
with the organization for 2 years unless there are special circumstances that warrant special
consideration, as determined by CMS.

 

43

 

Article X.

Relationship between Addendum and Part C Contract or 1876 Cost Contract

A. MA-PD Sponsor acknowledges that, if it is a Medicare Part C contractor, the termination or
nonrenewal of this addendum by either party may require CMS to terminate or non-renew the Sponsors
Part C contract in the event that such non-renewal or termination prevents the MA-PD Sponsor from
meeting the requirements of 42 CFR §422.4(c), in which case the Sponsor must provide the notices
specified in this contract, as well as the notices specified under Subpart K of 42 CFR Part 422.
MA-PD Sponsor also acknowledges that Article IX.B. of this addendum may prevent the sponsor from
entering into a Part C contract for two years following an addendum termination or non-renewal
where such non-renewal or termination prevents the MA-PD Sponsor from meeting the requirements of
42 CFR §422.4(c).

B. The termination of this addendum by either party shall not, by itself, relieve the parties from
their obligations under the Part C or cost plan contracts to which this document is an addendum.

C. In the event that the MA-PD Sponsors Part C or cost plan contract (as applicable) is terminated
or nonrenewed by either party, the provisions of this addendum shall also terminate. In such an
event, the MA-PD Sponsor and CMS shall provide notice to enrollees and the public as described in
this contract as well as 42 CFR Part 422, Subpart K or 42 CFR Part 417, Subpart K, as applicable.

Article XI.

Intermediate Sanctions

The MA-PD Sponsor shall be subject to sanctions and civil monetary penalties, consistent with
Subpart 0 of 42 CFR Part 423.

Article XII.

Severability

Severability of the addendum shall be in accordance with 42 CFR §423.504(e).

Article XIII.

Miscellaneous

A. DEFINITIONS: Terms not otherwise defined in this addendum shall have the meaning given such
terms at 42 CFR Part 423 or, as applicable, 42 CFR Part 422 or Part 417.

B. ALTERATION TO ORIGINAL ADDENDUM TERMS: The MA-PD Sponsor agrees that it has not altered in any
way the terms of the MA-PD addendum presented for signature by CMS. MA-PD Sponsor agrees that any
alterations to the original text the MA-PD Sponsor may make to this addendum shall not be binding
on the parties.

C. ADDITIONAL CONTRACT TERMS: The MA-PD Sponsor agree to include in this addendum other terms and
conditions in accordance with 42 CFR §423.505(j).

D. CMS APPROVAL TO BEGIN MARKETING AND ENROLLMENT ACTIVITIES: The MA-PD Sponsor agrees that it must
complete CMS operational requirements related to its Part D benefit prior to receiving CMS approval
to begin MA-PD plan marketing activities relating to its Part D benefit. Such activities include,
but are not limited to, establishing and successfully testing connectivity with CMS systems to
process enrollment applications (or contracting with an entity qualified to perform such functions
on MA-PD Sponsors behalf) and successfully demonstrating the capability to submit accurate and
timely price comparison data To establish and successfully test connectivity, the MA-PD Sponsor
must, 1) establish and test physical connectivity to the CMS data center, 2)
acquire user identifications and passwords, 3) receive, store, and maintain data necessary to
perform enrollments and send and receive transactions to and from CMS, and 4) check and receive
transaction status information.

E. Pursuant to section 13112 of the American Recovery and Reinvestment Act of 2009 (ARRA), the
MA-PD Sponsor agrees that as it implements, acquires, or upgrades its health information technology
systems, it shall utilize, where available, health information technology systems and products that
meet standards and implementation specifications adopted under section 3004 of the Public Health
Service Act, as amended by section 13101 of the ARRA.

 

44

 

In witness whereof, the parties hereby execute this contract.

This document has been electronically signed by:

	 	 	 
	FOR THE MA ORGANIZATION
	 	 
	 
	 	 
	 

Contracting Official Name

	 	 
	 
	 	 
	 

Date

	 	 
	 
	 	 
	 

	 	 
	Organization

	 	Address
	 
	 	 
	FOR THE CENTERS FOR MEDICARE & MEDICAID SERVICES
	 	 
	 
	 	 
	 

	 	 
	 

	 	Date

 

45

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00184-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00184-of-00352.parquet"}]]