Document:

Exhibit
10.114

 

 

 

NOTICE AMENDMENT

Contract Amendments Required by

SB 260, AB 1455, AB 2907 and AB 1286

 

This Notice Amendment
supplements, amends, and is made a part of the agreement (“Agreement”)
presently in force between PacifiCare of California (“PacifiCare”) and
Professional Care Montebello (“Medical Group”).  This Notice Amendment applies to PacifiCare’s commercial Managed
Care Plans and is issued by PacifiCare in accordance with the provisions of the
Agreement which permit PacifiCare to issue notice amendments as necessary to
maintain compliance with changes in law, and this Notice Amendment does not
require the consent of Medical Group.

 

Recitals

 

WHEREAS, the California
legislature has enacted Senate Bill 260 (Speier) regarding financial standards and
requirements for “risk bearing organizations” that enter into “risk
arrangements” with health care service plans, the requirements of which are set
forth at Section 1375.4 of the California Health and Safety Code; and

 

WHEREAS, as a result of the
passage of SB 260 and the adoption of Section 1375.4, PacifiCare is
required to conform with the financial reporting requirements established by
the California Department of Managed Health Care that pertain to health care
service plans and risk bearing organizations, which requirements are set forth
at Title 28 of the California Code of Regulations, Sections 1300.75.4 through
1300.75.4.6; and

 

WHEREAS, the California
legislature has enacted Assembly Bill 1455 (Scott) regarding claims settlement
practices and dispute resolution mechanisms for health care service plans, the
requirements of which amend and supplement the Knox-Keene Health Care Service
Act of 1975; and

 

WHEREAS, as a result of the
passage of AB 1455, PacifiCare is required to conform with the requirements
established by the Department of Managed Health Care regarding claims
resolution practices and dispute resolution mechanisms, which requirements are
set forth at Title 28 of the California Code of Regulations, Sections 1300.71
and 1300.71.38; and

 

WHEREAS, the California
legislature has enacted Assembly Bill 2907 (Cohn) regarding amendments to
contracts between health care providers and health care service plans, which
supplement the Knox Knox-Keene Health Care Service Plan Act of 1975 by adding
Section 1375.7 to the California Health and Safety Code; and

 

WHEREAS, the California
legislature has enacted Assembly Bill 1286 (Frommer) regarding continuity of
care for newly enrolled health plan members affected by certain enumerated
medical conditions whose existing providers do not participate in the newly
enrolled member’s health plan, and regarding continuity of care for individuals

 

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affected by such conditions whose
providers are leaving a health plan’s provider network, the provisions of which
amend and supplement Section 1373.96 and other sections of the Knox-Keene
Health Care Service Plan Act of 1975; and

 

WHEREAS, the Agreement permits
PacifiCare to amend the Agreement in order to maintain compliance with State
and Federal Law by giving notice of such amendment to Medical Group;

 

NOW, THEREFORE, PacifiCare
hereby amends the Provider Agreement as follows:

 

Amendment

 

Article I

SB 260 REGULATIONS

(FINANCIAL SOLVENCY)

 

1.                                       Definitions.

 

1.1                      “IBNR
Claims.” The term “IBNR Claims” shall refer to claims for services provided
to Members which are the financial responsibility of Medical Group, and which
have been incurred, but which have not been reported to Medical Group.

 

1.2                      “GAAP.”
The term “GAAP” shall mean generally accepted accounting principles,
consistently applied.

 

2.                                       Obligations
of Health Plan.

 

2.1                                 Monthly
Membership Reports. Notwithstanding any different provisions of the Agreement,
PacifiCare shall provide the following information to Medical Group on a
monthly basis for Members assigned to Medical Group within ten (10) calendar
days following the start of each month:

 

(a)                                  Membership
information containing the following elements:

 

(i)                                     Member
identification number;

(ii)                                  Name;

(iii)                               Birth
Date;

(iv)                              Gender;

(v)                                 Address
(including zip code);

(vi)                              Managed
Care Plan selected;

(vii)                           Employer
group identification;

(viii)                        Identity
of other third party coverage, if known;

(ix)                                Enrollment/disenrollment
dates;

 

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(x)                                   Medical
group/IPA number;

(xi)                                Provider
effective date;

(xii)                             Type
of change to coverage;

(xiii)                          Co-payment;

(xiv)                         Deductible;

(XV)                       Amount
of capitation to be paid per enrollee per month;

(xvi)                         Primary
care physicians, when selection is required by plan; and

 

(b)                                 The
following additional information:

 

(i)                                     Member
additions and terminations for the month (including: Member name, Member
identification number);

(ii)                                  Number
of additional Members under each Managed Care Plan;

(iii)                               Number
of deleted Members under each Managed Care Plan;

 

(c)                                  PacifiCare
shall submit all the information enumerated at Sections 2.1 (a) and (b) to
Medical Group electronically unless both PacifiCare and Medical Group agree in
writing that written reports may be submitted instead.

 

(d)                                 If the
information from Sections 2.1(a) and (b) are provided in more than one report,
all such reports shall be processed as of the same date.

 

(e)                                  Within
forty-five (45) calendar days of the close of each calendar quarter, PacifiCare
shall disclose to Medical Group through electronic transmission, or in writing
if agreed by both PacifiCare and Medical Group, a reconciliation of any
variances between the reports for information listed in Sections 2.1 (a) and
(b).

 

2.2                                 Quarterly
Risk-Sharing Reports. PacifiCare shall provide to Medical
Group on a quarterly basis, within forty-five (45) days of the close of each
calendar quarter, a quarterly risk-sharing report.  The risk sharing report shall contain a detailed description of
each and every amount (including expenses and income) that is sufficient to
allow verification of amounts allocated to Medical Group and PacifiCare under
the Agreement.  Where applicable, the
following information, at minimum, shall be provided in the quarterly
risk-sharing report:

 

(a)                                  Total
number of Member months;

 

(b)                                 Total
budget allocation for the Member months;

 

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(c)                                  Total
expenses paid during the period;

 

(d)                                 A
description of each and every amount of expense allocated to the PacifiCare and
to Medical Group by Member identification number, date of service, description
of service by claim codes, net payment, and date of payment.

 

2.3                                 Annual
Statement. PacifiCare shall provide Medical Group with a preliminary
payment report no later than one hundred fifty (150) days following the end of
the contract year consistent with the requirements of Section 2.2 and
provide payment, if any is due, to Medical Group no later than one hundred
eighty (180) days after the close of the contract year or the Agreement’s
termination date, whichever occurs first.

 

2.4                                 Annual
Disclosures. On the Agreement anniversary date, PacifiCare shall
disclose to Medical Group the following information for each and every type of
risk arrangement (traditional commercial, point of service, small group, and
individual plans), other than the Secure Horizons Health Plan, which may be
covered by the Agreement:

 

(a)                                  A
matrix of responsibility for medical expenses (physician, institutional,
ancillary, and pharmacy) which will be allocated to Medical Group, a facility
or PacifiCare under the Agreement;

 

(b)                                 Expected/projected
utilization rates and unit costs for each major expense service group
(inpatient, outpatient, primary care physician, specialist, pharmacy, home
health, durable medical equipment, ambulance, and other), as well as the source
of the data and the actuarial methods employed in determining the utilization
rates and unit costs by benefit plan type.

 

(c)                                  All
factors used to adjust payments or risk-sharing targets, including but not
limited to the following: age, sex, localized geographic area, family size,
experience rated, and benefit plan design, including copayment/deductible
levels;

 

(d)                                 The
amount of payment for each and every service to be provided under the contract,
including any fee schedules or other factors or units used in determining the
fees for each and every service.  To the
extent that reimbursement is made pursuant to a specified fee schedule, the
Agreement shall incorporate the fee schedule by reference, and shall
further specify the Medicare RBRVS year if RBRVS is the methodology used for
the fee schedule development.  For
any proprietary fee schedule, the Agreement

 

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shall include sufficient detail
that payment amounts related to that fee schedule can be accurately
predicted.

 

(e)                                  In the
case of Capitated Payment, PacifiCare shall disclose the amount to be paid per
Member per month and shall provide details sufficient to allow Medical Group to
verify the accuracy and appropriateness of any deductions from Capitation
Payments.

 

Article II

AB
1455 REGULATIONS

(CLAIMS PAYMENT and PROVIDER DISPUTES)

 

3.                                       Claims
Adjudication. In processing claims, Medical Group shall accept and
adjudicate claims for health care service provided to PacifiCare Members in
accordance with the provisions of Sections 1371, 1371.1, 1371.2, 1371.22,
1371.35, 1371.36, 1371.37, 1371.38, 1371.4, and 1371.8 of the California Health
and Safety Code and Sections 1300.71, 1300.71.38, 1300.71.4, and 1300.77.4 of
Title 28 of the California Code of Regulations.

 

4.                                       Quarterly
Performance Report. Medical Group shall submit a quarterly performance report
to PacifiCare within thirty (30) days of the close of each calendar quarter,
and during the term of this Agreement. 
Such report shall, at minimum, meet the following requirements:

 

4.1                                 The
report shall disclose
the percentage of claims paid timely and accurately by Medical Group consistent
with Sections 1371, 1371.1, 1371.2, 1371.22, 1371.35, 1371.36, 1371.37, 1371.4,
and 1371.8 of the California Health and Safety Code and Sections 1300.71,
1300.71.38, 1300.71.4 and 1300.77.4 of Title 28 of the California Code of
Regulations.

 

4.2                                 The
report shall include a tabulated record of each dispute received by Medical
Group from a provider, categorized by date of receipt, and shall include the
identification of each provider, describe the type of dispute, disposition of
each dispute, and state the number of working days for resolution of each such
dispute.  Each individual dispute
contained in a provider’s bundled notice of dispute shall be reported
separately.

 

4.3                                 The
report shall be signed by, and include the written verification of, a principal
officer of the Medical Group, as defined in Section 1300.45(o) of Title 28
of the California Code of Regulations. 
Such verification shall state that the report is true and correct to the
best knowledge and belief of such principal officer.

 

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5.                                       Provider
Dispute Resolution Mechanism.

 

5.1                                 Provider
Dispute Resolution Mechanisms. Medical Group shall establish and
maintain a fair, fast, and cost-effective dispute resolution mechanism to
process and resolve provider disputes in accordance with the provisions of Sections
1371, 1371.1, 1371.2, 1371.22, 1371.35, 1371.36, 1371.37, 1371.4, and 1371.8 of
the California Health and Safety Code and Sections 1300.71, 1300.71.38,
1300.71.4, and 1300.77.4 of Title 28 of the California Code of Regulations.  PacifiCare may assume responsibility for the
administration of Medical Group’s dispute resolution mechanism and for the
timely resolution of provider disputes in the event Medical Group fails to
timely resolve its provider disputes, including the issuance of a written decision.

 

5.2                                 Access
to Information. Medical Group shall make available to PacifiCare and to
the Department of Managed Health Care all records, notes, and documents
regarding Medical Group’s dispute resolution mechanism(s) and the resolution of
all disputes received from providers.

 

5.3                                 Disputes
Relating to Medical Necessity and Utilization Review. In
the event that a provider disagrees with the resolution of any dispute between
such provider and Medical Group which relates to medical necessity or
utilization review, such Medical Group shall have an unconditional right of
appeal for such claim to PacifiCare’s dispute resolution process for a de novo
review and resolution for a period of sixty (60) working days from Medical
Group’s date of determination, as defined at Section 1300.71 (a) of Title
28 of the California Code of Regulations, pursuant to the provisions of
Section 1300.71.38(a)(4) of Title 28 of the California Code of
Regulations.

 

6.                                       Waiver
Prohibited. Medical Group shall not require or permit a contracted
provider to waive any right conferred upon such provider or any obligation
imposed on PacifiCare by Sections 1371, 1371.1, 1371.2, 1371.22, 1371.35,
1371.36, 1371.37, 1371.4, and 1371.8 of the California Health and Safety Code
and Sections 1300.71, 1300.71,38, 1300.71.4, and 1300.77.4 of Title 28 of the
California Code of Regulations relating to claims processing or payment.  Any contractual provision or other agreement
purporting to constitute, create or result in such a waiver shall be null and
void.

 

Article III

AB 2907

(PROVIDER’S BILL OF RIGHTS)

 

7.                                       Amendments
or Modifications to Agreement. Except as otherwise provided in this
Article III, all amendments or modifications to the Agreement shall be
effective only upon mutual written agreement of the parties.

 

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8.                                       Amendments
to Provider Manual. PacifiCare may by notice amend or change any or all
provisions of the Provider Manual by providing forty-five (45) business days’
prior written notice to Medical Group unless the amendment is material and is
not made in order to comply with a change in State or Federal Law or
Accreditation Standard, in which case the provisions of Section 11 of this
Amendment, below, shall apply.  Any
notice amendment pursuant to the terms of this Section shall be binding
upon Medical Group at the end of the forty-five (45) business day period.

 

9.                                       Amendments
to Agreement to Comply with State and Federal Law.
PacifiCare may amend this Agreement by providing thirty (30) calendar days’
prior written notice to Medical Group in order to maintain compliance with
State and Federal Law.  Such amendment
shall be binding upon Medical Group at the end of the thirty (30) calendar day
period and shall not require the consent of Medical Group.

 

10.                                 Amendments
to Managed Care Plans. PacifiCare may by notice amend or
change any or all provisions of the Managed Care Plans by providing forty-five
(45) business days’ prior written notice to Medical Group unless the amendment
is material or it impacts Medical Group and is not made in order to comply with
a change in State or Federal Law or Accreditation Standard, in which case the
provisions of Section 11 of this Amendment, below.  Any notice amendment pursuant to the terms
of this Section shall be binding upon Medical Group at the end of the
forty-five (45) business day period and shall not require the consent of
Medical Group.

 

11.                                 Material
Changes. Medical Group and PacifiCare shall seek to agree to
amendments to the Agreement which satisfactorily address material changes
proposed by PacifiCare which are not permitted to be made by a notice amendment
pursuant to the terms of the Agreement or this Amendment or applicable State
and Federal Law.  In such event, the
applicable amendment shall not be effective until the parties amend the
Agreement through a written amendment signed by both parties.  For the purposes of this
Section “material” shall have the meaning set forth in California Health
and Safety Code Section 1375.7(f)(2), which at the time of execution of
this Agreement, states that “material” shall mean a change to which a
reasonable person would attach importance in determining action to be taken
upon such provision.

 

In the event PacifiCare has
provided Medical Group with notice of an amendment pursuant to Sections 8 or 10
of this Amendment, above, and such amendment is material and the parties are
not able to reach a mutual agreement on the terms of the amendment.  Medical Group retains its rights to terminate
the Agreement pursuant to California Health and Safety Code
Section 1375.7(b).  If Medical
Group desires to exercise its right to terminate the Agreement pursuant to
California Health and Safety Code Section 1375.7(b), Medical Group agrees
to

 

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provide PacifiCare with written
notice of its intent to terminate the Agreement not less than five (5) business
days prior to the expiration of the forty-five (45) business day notice period
provided at Sections 8 and 10 and Medical Group agrees that PacifiCare may
withdraw its notice amendment on or before the expiration of the forty-five
(45) business day notice period thereby canceling Medical Group’s termination
right.

 

Article IV

AB 1286

(CONTINUING CARE)

 

1.2                                 Definitions.

 

12.1                           ‘‘Acute
Condition” means a medical condition that involves a sudden onset of
symptoms due to an illness, injury, or other medical problem that requires
prompt medical attention and that has a limited duration.

 

12.2                           ‘‘Newborn
Child” means a newborn child between birth and age thirty-six (36) months.

 

12.3                           “New
Member” means a Member who has become newly enrolled with PacifiCare and
has been assigned to Medical Group.

 

12.4                           “Nonparticipating
Provider” means, with respect to a New Member, a licentiate, as defined in
Section 805 of the California Business and Professions Code, which is not
employed by or contracted with Medical Group for the provision of Covered
Services to Members, but who, at the time such New Member’s coverage with
PacifiCare became effective, was providing Covered Services for one of the
Special Circumstances.

 

12.5                           “Pregnancy”
means the three trimesters of pregnancy and the immediate postpartum period, “Pregnant”
shall refer to the state of Pregnancy.

 

12.6                           “Serious
Chronic Condition” refers to a medical condition due to a disease, illness,
or other medical problem or medical disorder that is serious in nature and that
persists without full cure or worsens over an extended period of time or
requires ongoing treatment to maintain remission or prevent deterioration.

 

12.7                           “Special
Circumstances” refers to an Acute Condition, Serious Chronic Condition,
Pregnancy, Terminal Illness, Newborn Care, or Surgery/Other Procedure.

 

12.8                           “Surgery/Other
Procedure” refers to a surgical or other procedure that is authorized by
PacifiCare as part of a documented course of treatment which has been
recommended and documented by a “provider,” as defined

 

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at Section 1345(i) of the
California Health and Safety Code, to occur within one hundred eighty (180)
days of the termination, nonrenewal or expiration of the Agreement between
PacifiCare and Medical Group or an agreement between Medical Group and one of
its Participating Providers or (in the case of a New Member) within one hundred
eighty (180) days of the effective date of coverage for such New Member.

 

12.9                           “Terminal
Illness” refers to an incurable or irreversible condition that has a high
probability or causing death within one (1) year or less, “Terminally Ill”
refers to the state of Terminal Illness.

 

12.10                     “Termination”
shall mean (i) the termination, expiration, or nonrenewal, or any circumstance
which results in the termination, expiration, or nonrenewal, of any arrangement
by which a Participating Provider provides Covered Services to Members, or (ii)
the termination, expiration, or nonrenewal, or any circumstance which results
in the termination, expiration, or nonrenewal, of the Agreement.

 

13.                                 General
Continuing Care Obligations of Provider. The provisions of this Article IV
shall amend only Medical Group’s obligations to continue to provide Covered
Services to Members in Special Circumstances. 
The provisions of this Article IV shall not modify Medical Group’s
general obligations to continue to provide Covered Services to Members, except
as necessary to modify Medical Group’s obligations to provide Covered Services
to Members in Special Circumstances. 
Notwithstanding the generality of the foregoing, all provisions of the
Agreement pertaining to (i) Medical Group’s general continuing care
obligations, (ii) Medical Group’s obligations to provide continuing care in the
event PacifiCare ceases operating or the Agreement is terminated for
nonpayment, (iii) the survival of all provisions of the Agreement pertaining to
Medical Group’s continuing care obligations, and (iv) Medical Group’s
obligation to provide services to Members transferred to Medical Group from a
terminated PacifiCare provider shall remain in full force and effect without
modification, except as necessary to modify Medical Group’s obligations to
provide Covered Services in Special Circumstances as set forth in this
Amendment.

 

14.                            Special
Circumstances Continuing Care Obligations.

 

14.1                           Termination
of Participating Provider. Following the Termination of any Participating
Provider, Medical Group shall, at the request of the applicable Member and in
accordance with PacifiCare’s policies and procedures, assure that such
Participating Provider shall provide Covered Services in Special Circumstances
as required by this Article IV.

 

14.2                           Termination
of the Agreement. Following the Termination of the Agreement, Medical Group
shall, at the request of the applicable Member and in accordance with
PacifiCare’s policies and procedures, assure that

 

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all of its Participating
Providers shall provide Covered Services in Special Circumstances to Members as
required by this Article IV.

 

14.3                           New
Members. Following the enrollment of a New Member into a PacifiCare
health plan, Medical Group shall, at the request of such New Member and in
accordance with PacifiCare’s policies and procedures, assure that the
applicable Nonparticipating Provider shall provide Covered Services in Special
Circumstances to New Members as required by this Article IV.

 

14.4                           Exceptions.

 

(a)                                  Terminated
Participating Providers. Medical Group is not obligated to
arrange for its terminated Participating Providers to provide Covered Services
in Special Circumstances to Members if the terminated Participating Provider
(i) was terminated for a medical disciplinary cause or reason, as defined in
paragraph (6) of subdivision (a) of Section 805 of the California Business
and Professions Code, or (ii) was terminated for fraud or other criminal
activity, (iii) does not agree to comply, or does not comply, with the same
contractual terms and conditions that were imposed upon such Participating
Provider prior to termination, including, but not limited to, credentialing,
hospital privileging, utilization review, peer review, and quality assurance
requirements, or (iv) has not agreed in advance to compensation terms for the
provision of Covered Services in Special Circumstances to Members, or does not
otherwise accept payment rates for such services, at rates (and methods of payment)
similar to those used by Medical Group for currently contracting providers
providing similar services who are not capitated and who are practicing in the
same or similar geographic area as the terminated Participating Provider.

 

(b)                                 Nonparticipating
Providers. Medical Group is not obligated to arrange for
Nonparticipating Providers to provide Covered Services in Special Circumstances
to New Members if the Nonparticipating
Provider (i) fails to agree in writing to be subject to the same contractual
terms and conditions that are imposed upon Medical Group’s currently contracted
participating providers providing similar services who are not capitated and
who are practicing in the same or a similar geographic region as the
Nonparticipating Provider, including, but not limited to, credentialing,
hospital privileging, utilization review, peer review, and quality assurance
requirements, or (ii) has not agreed in advance to compensation terms for the
provision of Covered Services in Special Circumstances to New Members, or does
not otherwise accept payment rates for such services, at rates (and

 

10

 

methods of payment) similar to
those used by Medical Group for currently contracting providers providing
similar services who are not capitated and who are practicing in the same or a
similar geographic area as the Nonparticipating Provider.

 

14.5                           Time
Periods for the Provision of Covered Services in Special Circumstances.

 

(a)                                  Acute
Condition.

 

(i)                                     In the
case of a Member who has an Acute Condition, the Covered Services in Special
Circumstances shall be provided to the Member by Medical Group (in the event of
Termination of the Agreement), or by the terminated Participating Provider (in
the event of Termination of the Participating Provider), as the case may be,
for the duration of the Acute Condition.

 

(ii)                                  In the
case of a New Member who has an Acute Condition, Medical Group shall assure
that the Covered Services in Special Circumstances shall be provided by the
applicable Nonparticipating Provider for the duration of the Acute Condition.

 

(b)                                 Serious
Chronic Condition.

 

(i)                                     In the
case of a Member who has a Serious Chronic Condition, the Covered Services in
Special Circumstances shall be provided to the Member by Medical Group (in the
event of Termination of the Agreement), or by the terminated Participating
Provider (in the event of Termination of the Participating Provider), as the
case may be, for a period not to exceed twelve (12) months from the contract
Termination date.

 

(ii)                                  In the
case of a New Member who has a Serious Chronic Condition, Medical Group shall
assure that the Covered Services in Special Circumstances shall be provided to
the New Member by the applicable Nonparticipating Provider for a period not to
exceed twelve (12) months from the effective date of such New Member’s coverage
with PacifiCare.

 

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(c)                                  Pregnancy.

 

(i)                                     In the
case of a Member who is Pregnant, the Covered Services in Special Circumstances
shall be provided to the Member by Medical Group (in the event of Termination
of the Agreement), or by the terminated Participating Provider (in the event of
Termination of the Participating Provider), as the case may be, for the
duration of the Pregnancy.

 

(ii)                                  In the
case of a New Member who is Pregnant, Medical Group shall assure that the
Covered Services in Special Circumstances shall be provided to the New Member
by the applicable Nonparticipating Provider for the duration of the Pregnancy.

 

(d)                                 Terminal
Illness.

 

(i)                                     In the
case of a Member who is Terminally Ill, the Covered Services in Special
Circumstances shall be provided to the Member by Medical Group (in the event of
Termination of the Agreement), or by the terminated Participating Provider (in
the event of Termination of the Participating Provider), as the case may be,
for the duration of the Terminal Illness.

 

(ii)                                  In the
case of a New Member who is Terminally Ill, Medical Group shall assure that the
Covered Services in Special Circumstances shall be provided to the New Member
by the applicable Nonparticipating Provider for the duration of the Terminal
Illness.

 

(e)                                  Newborn
Child.

 

(i)                                     In the
case of a Newborn Child of a Member, the Covered Services in Special
Circumstances shall be provided to the Member’s Newborn Child by Medical Group
(in the event of Termination of the Agreement), or by the terminated
Participating Provider (in the event of Termination of the Participating
Provider), as the case may be, for a period not to exceed twelve (12) months
from the contract termination date.

 

(ii)                                  In the
case of a Newborn Child of a New Member, Medical Group shall assure that the
Covered Services in Special Circumstances shall be provided by the applicable
Nonparticipating Provider to the New Member’s Newborn Child for a period not to
exceed twelve (12) months from

 

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the effective date of such New
Member’s coverage with PacifiCare.

 

(f)                                    Surgery/Other
Procedure.

 

(i)                                     In the
case of a Surgery/Other Procedure, the Covered Services in Special
Circumstances shall be provided to the Member by Medical Group (in the event of
Termination of the Agreement), or by the terminated Participating Provider (in
the event of Termination of the Participating Provider), as the case may be.

 

(ii)                                  In the
case of a Surgery/Other Procedure for a New Member, Medical Group shall assure
that the Covered Services in Special Circumstances shall be provided to the New
Member by the applicable Nonparticipating Provider.

 

15.                                 Compensation
of Participating Providers. Medical Group shall be solely
responsible for compensating any terminated Participating Provider or
Nonparticipating Provider for the provision of Covered Services in Special
Circumstances to Members and New Members as agreed upon in writing between
Medical Group and the terminated Participating Provider or at the rate and
method of payment used by Medical Group for its contracting providers providing
similar services who are not capitated and who are practicing in the same or
similar geographic area as the terminated Participating Provider.

 

16.                                 Notifications
Regarding Termination. Medical Group shall provide ninety
(90) calendar days’ prior written notice to PacifiCare of the termination of
any of its Participating Providers (or such longer time as may be required by
the Agreement); provided, however, that if any Participating Provider is
terminated with less than ninety (90) calendar days’ notice, then Medical Group
shall provide written notice to PacifiCare within five (5) business days of
Medical Group becoming aware of such termination. Additionally, Medical Group
shall, and Medical Group shall cause the applicable Participating Provider to,
identify to ‘PacifiCare, in writing, any Members who (i) are receiving treatment
from such Participating Provider for an Acute Condition, Serious Chronic
Condition, Pregnancy, or Terminal Illness, (ii) have a Newborn Child, or (iii)
have been authorized to receive a Surgery/Other Procedure.

 

17.                                 Survival.
Medical Group agrees that (i) all of the provisions of this Article IV, as
well as all provisions of the Agreement which relate to Medical Group’s
obligation to provide continuing care to PacifiCare Members (even in the
absence of any Special Circumstances), shall survive termination of the
Agreement regardless of the cause giving rise to such termination, and (ii) all
such provisions shall be construed for the benefit of PacifiCare Members.

 

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Article V

GENERAL
PROVISIONS

 

18.                                 Applicability
of Amendment. This Amendment shall not apply to PacifiCare’s Secure
Horizons Medicare+Choice Health Plan.

 

19.                                 Effective
Date. This Amendment shall be effective on January 1, 2004.

 

20.                                 Construction
of Terms. Terms used and not otherwise defined in this Amendment
shall have the meanings assigned to them in the Agreement.

 

21.                                 Agreement
Remains Effective. Except as expressly modified by the terms of this
Amendment, all of the terms and conditions set forth in the Agreement shall
remain in full force and effect. No changes to Medical Group’s compensation
shall result from this Notice Amendment, nor shall any change in the division
of financial responsibility between PacifiCare and Medical Group for Covered
Services be deemed to occur by virtue of the issuance of this Notice Amendment.

 

22.                                 Conflicting
Terms. In the event that the terms or conditions of the Agreement
and this Amendment are in conflict, the terms of this Amendment shall control.

 

23.                                 Changes
in Law. PacifiCare acknowledges that (i) Governor Schwarzeneggar
has ordered a review of all administrative regulations adopted, amended, or
repealed since January 6, 1999, for the purpose of determining the
necessity, authority, clarity, consistency, reference and non-duplication of
such regulations, and that (ii) the California Healthcare Association has filed
a Petition for Writ of Mandate challenging certain provisions of the
regulations adopted by the Department of Managed Health Care at Title 28 of the
California Code of Administrative Regulations, Sections 1300.71 and
1300.71.38.  Accordingly, PacifiCare
reserves the right to amend any provision(s) of the Agreement or of this Notice
Amendment as reasonable in light of these reviews or any other changes in applicable
law or regulation.

 

14Exhibit
10.115

 

 

 

BLUE
SHIELD

HMO IPA/MEDICAL GROUP

SHARED SAVINGS PROVIDER AGREEMENT

 

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

 

 

1

 

TABLE OF CONTENTS

 

	
  I.

  	
  DEFINITIONS

  	
   

  
	
   

  	
  1.1

  	
  Agreement Year

  	
   

  
	
   

  	
  1.2

  	
  Authorization

  	
   

  
	
   

  	
  1.3

  	
  Benefit Program

  	
   

  
	
   

  	
  1.4

  	
  Blue
  Shield Providers

  	
   

  
	
   

  	
  1.5

  	
  Capitated
  Professional Services

  	
   

  
	
   

  	
  1.6

  	
  Capitation

  	
   

  
	
   

  	
  1.7

  	
  Copayments

  	
   

  
	
   

  	
  1.8

  	
  Covered
  Services

  	
   

  
	
   

  	
  1.9

  	
  Emergency
  Services

  	
   

  
	
   

  	
  1.10

  	
  Evidence of
  Coverage

  	
   

  
	
   

  	
  1.11

  	
  Group Provider

  	
   

  
	
   

  	
  1.12

  	
  Group Service Area

  	
   

  
	
   

  	
  1.13

  	
  Health Services
  Contract

  	
   

  
	
   

  	
  1.14

  	
  Medically
  Necessary

  	
   

  
	
   

  	
  1.15

  	
  Member

  	
   

  
	
   

  	
  1.16

  	
  Primary Care Physician

  	
   

  
	
   

  	
  1.17

  	
  Provider Manual

  	
   

  
	
   

  	
  1.18

  	
  Shared Risk Services

  	
   

  
	
   

  	
  1.19

  	
  Urgent Care Services

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  II.

  	
  OBLIGATIONS
  OF GROUP

  	
   

  
	
   

  	
  2.1

  	
  Capitated
  Professional Services

  	
   

  
	
   

  	
  2.2

  	
  Referrals
  For Other Covered Services

  	
   

  
	
   

  	
  2.3

  	
  Availability

  	
   

  
	
   

  	
  2.4

  	
  Standards For Provision
  of Care

  	
   

  
	
   

  	
  2.5

  	
  Providers Not Meeting
  Standards

  	
   

  
	
   

  	
  2.6

  	
  Group Service Contracts

  	
   

  
	
   

  	
  2.7

  	
  Quality
  Improvement/Case Management/Utilization Management Programs

  	
   

  
	
   

  	
  2.8

  	
  Right to Re-Assign
  Members

  	
   

  
	
   

  	
  2.9

  	
  Outpatient Drug
  Formulary and Pharmacy Information

  	
   

  
	
   

  	
  2.10

  	
  Reciprocity

  	
   

  
	
   

  	
  2.11

  	
  Termination of
  Physician/Patient Relationship

  	
   

  
	
   

  	
  2.12

  	
  Encounter Data and Other
  Reporting

  	
   

  
	
   

  	
  2.13

  	
  Disclosures

  	
   

  
	
   

  	
  2.14

  	
  Direct
  Access Programs

  	
   

  
	
   

  	
  2.15

  	
  Addition
  of New Plan Benefit Programs

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  III.

  	
  PAYMENT
  OF PROVIDERS BY GROUP

  	
   

  
	
   

  	
  3.1

  	
  Timely
  Group Payment

  	
   

  
	
   

  	
  3.2

  	
  Failure
  To Make Payment

  	
   

  

 

2

 

	
  IV.

  	
  PERFORMANCE
  OF DELEGATED FUNCTIONS

  	
   

  
	
   

  	
  4.1

  	
  Delegation

  	
   

  
	
   

  	
  4.2

  	
  Blue Shield Monitoring and
  Oversight

  	
   

  
	
   

  	
  4.3

  	
  Termination of
  Delegation

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  V.

  	
  OBLIGATIONS OF
  BLUE SHIELD

  	
   

  
	
   

  	
  5.1

  	
  Directory and Use of Names

  	
   

  
	
   

  	
  5.2

  	
  Provider Manual

  	
   

  
	
   

  	
  5.3

  	
  Blue Shield Reports

  	
   

  
	
   

  	
  5.4

  	
  Administrative
  Services

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  VI.

  	
  ELIGIBILITY
  OF BLUE SHIELD MEMBERS

  	
   

  
	
   

  	
  6.1

  	
  Identification Cards
  and Verification

  	
   

  
	
   

  	
  6.2

  	
  Verification
  of Eligibility

  	
   

  
	
   

  	
  6.3

  	
  Eligibility
  List and Modifications

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  VII.

  	
  COMPENSATION
  & FINANCIAL TERMS

  	
   

  
	
   

  	
  7.1

  	
  Capitation
  Payments

  	
   

  
	
   

  	
  7.2

  	
  Services
  Other Than Capitated Professional Services

  	
   

  
	
   

  	
  7.3

  	
  Copayments

  	
   

  
	
   

  	
  7.4

  	
  Stop Loss Coverage

  	
   

  
	
   

  	
  7.5

  	
  Shared Risk Programs

  	
   

  
	
   

  	
  7.6

  	
  Blue Shield POS
  Benefit Program

  	
   

  
	
   

  	
  7.7

  	
  Third Party Liens

  	
   

  
	
   

  	
  7.8

  	
  Groups Organized By
  Geographic Regions

  	
   

  
	
   

  	
  7.9

  	
  Purpose of Incentive
  Programs

  	
   

  
	
   

  	
  7.10

  	
  Blue Shield
  Timeliness Guarantee

  	
   

  
	
   

  	
  7.11

  	
  Encounter Data
  Submission Penalties

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  VIII.

  	
  PROTECTION OF MEMBERS

  	
   

  
	
   

  	
  8.1

  	
  Non
  Discrimination

  	
   

  
	
   

  	
  8.2

  	
  Credentialed
  Providers

  	
   

  
	
   

  	
  8.3

  	
  Charges to Members

  	
   

  
	
   

  	
  8.4

  	
  Protection of
  Members

  	
   

  
	
   

  	
  8.5

  	
  Benefits
  Determination

  	
   

  
	
   

  	
  8.6

  	
  Member Complaints and
  Grievances

  	
   

  
	
   

  	
  8.7

  	
  Medical Necessity
  Assistance

  	
   

  
	
   

  	
  8.8

  	
  Free Exchange of
  Information

  	
   

  
	
   

  	
  8.9

  	
  Insurance

  	
   

  

 

3

 

	
  IX.

  	
  MEDICAL RECORDS & CONFIDENTIALITY

  	
   

  
	
   

  	
  9.1

  	
  Medical Records

  	
   

  
	
   

  	
  9.2

  	
  Confidentiality

  	
   

  
	
   

  	
  9.3

  	
  Member Access to Records

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  X.

  	
  COOPERATION WITH
  AUDITS & CERTIFICATIONS

  	
   

  
	
   

  	
  10.1

  	
  Disclosure of Records

  	
   

  
	
   

  	
  10.2

  	
  Site Evaluations

  	
   

  
	
   

  	
  10.3

  	
  Accreditation Surveys

  	
   

  
	
   

  	
  10.4

  	
  Compliance Monitoring

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  XI.

  	
  RESOLUTION OF DISPUTES

  	
   

  
	
   

  	
  11.1

  	
  Provider Dispute
  Resolution Procedure

  	
   

  
	
   

  	
  11.2

  	
  Arbitration
  of Disputes

  	
   

  
	
   

  	
  11.3

  	
  Cooperation
  With Member Disputes

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  XII.

  	
  TERM
  & TERMINATION

  	
   

  
	
   

  	
  12.1

  	
  Term

  	
   

  
	
   

  	
  12.2

  	
  Termination
  Without Cause

  	
   

  
	
   

  	
  12.3

  	
  Termination for
  Cause

  	
   

  
	
   

  	
  12.4

  	
  Notice and Cure
  Period

  	
   

  
	
   

  	
  12.5

  	
  Termination Not an
  Exclusive Remedy

  	
   

  
	
   

  	
  12.6

  	
  Effect of
  Termination

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  XIII.

  	
  COMPLIANCE
  WITH LEGAL REQUIREMENTS

  	
   

  
	
   

  	
  13.1

  	
  Consistency with
  State Law

  	
   

  
	
   

  	
  13.2

  	
  Consistency with
  Federal Law

  	
   

  
	
   

  	
  13.3

  	
  Coordination of
  Benefits 

  	
   

  
	
   

  	
  13.4

  	
  Timely Payment

  	
   

  
	
   

  	
  13.5

  	
  Disclosure of
  Provider Profiling

  	
   

  
	
   

  	
  13.6

  	
  Provider Terminations

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  XIV.

  	
  GENERAL PROVISIONS

  	
   

  
	
   

  	
  14.1

  	
  Waiver of Breach

  	
   

  
	
   

  	
  14.2

  	
  Amendments

  	
   

  
	
   

  	
  14.3

  	
  Entire Agreement

  	
   

  
	
   

  	
  14.4

  	
  Independent Contractors

  	
   

  
	
   

  	
  14.5

  	
  Notices

  	
   

  
	
   

  	
  14.6

  	
  Third
  Party Beneficiaries

  	
   

  
	
   

  	
  14.7

  	
  Assignment,
  Subcontracting, and Addition of PCPs

  	
   

  
	
   

  	
  14.8

  	
  Interpretation of
  Agreement

  	
   

  
	
   

  	
  14.9

  	
  Confidentiality/Trade Secrets

  	
   

  
	
   

  	
  14.10

  	
  Non-Solicitation

  	
   

  
	
   

  	
  14.11

  	
  Association Disclosure

  	
   

  

 

4

 

	
  EXHIBIT A

  	
  Group Information and
  Benefit Programs

  	
   

  
	
  EXHIBIT
  B

  	
  Division
  of Financial Responsibilities

  	
   

  
	
  EXHIBIT C

  	
  Capitation

  	
   

  
	
  EXHIBIT C-l

  	
  Capitation Rates

  	
   

  
	
  EXHIBIT D

  	
  Shared Savings Programs

  	
   

  
	
  EXHIBIT D-1-

  	
  Shared Savings Fund
  Allocations

  	
   

  
	
  EXHIBIT D-2

  	
  Shared Savings Fund
  Allocations – Blue Shield 65 Plus

  	
   

  
	
  EXHIBIT D-3

  	
  Pharmacy Shared Savings
  Fund Allocations

  	
   

  
	
  EXHIBIT E

  	
  Blue Shield Allowable Rates

  	
   

  
	
  EXHIBIT F

  	
  Delegation Responsibilities

  	
   

  
	
   

  	
  Attachment I –
  Quality Management Requirements

  	
   

  
	
   

  	
  Attachment II –
  Utilization Management Requirements

  	
   

  
	
   

  	
  Attachment III –
  Credentialing/Delegation Requirements

  	
   

  
	
   

  	
  Attachment IV –
  Claims Processing Requirements

  	
   

  
	
  EXHIBIT G-l 

  	
  Blue Shield 65 Plus
  Provisions

  	
   

  
	
  EXHIBIT G-2 

  	
  Blue Shield POS
  Provisions

  	
   

  
	
  EXHIBIT H

  	
  Professional Stop Loss
  Program

  	
   

  

 

5

 

Fully
Executed

HMO
IPA/MEDICAL GROUP

SHARED SAVINGS PROVIDER AGREEMENT

 

This Agreement
is entered into between PROFESSIONAL CARE IPA
MEDICAL GROUP, a California corporation (hereinafter “Group”), and
California Physicians’ Service, Inc., d.b.a., Blue Shield of California, a
California nonprofit corporation (hereinafter “Blue Shield”).  The Effective Date of this Agreement shall
be January 1, 2003.

 

RECITALS

 

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

 

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

 

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

 

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

 

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

 

I. DEFINITIONS

 

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

 

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

 

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

 

6

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

7

 

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

 

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

 

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

 

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

 

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

 

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

 

1.17                           Provider Manual:   refers to the manuals developed by Blue
Shield which set forth the operational rules and procedures applicable to the
Group and Group Providers.  The

 

8

 

Provider Manual will include the
HMO Provider Manual, the HMO Benefit Guidelines and the Blue Shield Medical
Policy Manual.

 

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

 

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

 

II. OBLIGATIONS OF GROUP

 

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

 

2.2                                 Referrals For Other Covered Services.

 

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

 

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

 

(c)                                  In
addition, upon notice by Blue Shield to Group that Blue Shield has developed
other specialty networks for the provision of Covered Services that are not
Capitated Professional Services, Group shall utilize such applicable specialty
network(s) for the provision of such services to Members, unless (except for
the organ transplant

 

9

 

provider network referred to above)
Group demonstrates to Blue Shield’s reasonable satisfaction that Group
Providers are able to offer comparable services of comparable quality and cost
effectiveness to the services to be offered by Blue Shield’s specialty network.

 

2.3                                 Availability.

 

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

 

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

 

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

 

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

 

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

 

10

 

PCP selection process and shall assist
Members in selecting a PCP when requested to do so by the Member or Blue
Shield.

 

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

 

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

 

2.4                                 Standards For Provision of Care.

 

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

 

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

 

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

 

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

 

(e)                                  Each
Group Physician shall authorize each hospital at which he/she maintains staff
privileges to notify Blue Shield should any disciplinary or other action of any
kind

 

11

 

be initiated against such physician
which could result in any suspension, reduction, or modification of his/her
hospital privileges.

 

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

 

2.6                                 Group Service Contracts.  Group shall provide to Blue Shield a written
list of its Group Providers, and each month notify Blue Shield of any additions
or deletions to such list (including any notices of termination of Group
Providers), in addition to which Group shall provide Blue Shield with immediate
notice of termination of Group Providers. 
Further, Group shall provide timely response to reasonable periodic
requests from Blue Shield for verification of the current list of Group
Providers.  Group’s contracts with Group
Providers shall be in writing and shall ensure that such providers: (a) seek
payment for the provided services only from Group and under no circumstances
seek payment from the Member or from Blue Shield; (b) under no circumstances
balance bill or surcharge Members for Covered Services (including in the event
of Group and/or Blue Shield’s insolvency); (c) maintain and disclose such
records to Blue Shield and to Governmental Officials as set forth in Article IX
hereof; (d) permit Government Officials and Blue Shield to inspect its offices,
records, and facilities as set forth in Article X; (e) cooperate with and
participate in Blue Shield’s and Group’s quality improvement and utilization
management programs and Member grievance and appeal procedures; and, (f)
maintain such professional and general business liability insurance as set
forth in Article VIII hereof.  Upon Blue
Shield’s request, Group’s form of provider contract(s), along with the executed
signature pages to such contracts, shall be provided to Blue Shield.  Group may maintain the confidentiality of
its payment rates (other than bonus/withhold/shared risk or savings
arrangements), provided that such does not result in concealment or
misunderstanding of other terms and provisions of the contract.  Upon Blue Shield’s request, such contracts
shall be promptly amended to contain any provisions required to be contained in
provider contracts by either the Department of Corporations (“DMHC”), CMS, or
any other governmental agency.

 

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

 

12

 

the Blue Shield Quality Management
Program.  Group shall comply with and
accept as final, the decisions of the Blue Shield quality improvement and
utilization management program, and pending resolution of any dispute through
the dispute resolution process, comply with the decisions of the Blue Shield quality
improvement and utilization management program.

 

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

 

2.9                                 Outpatient Drug Formulary and Pharmacy
Information.

 

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

 

(b)                                 In the
event that Blue Shield provides to Group computerized or electronic data
regarding prescriptions obtained by Members and drugs supplied, Group agrees
that such information is provided for the limited and restricted purpose of
utilization management.  Under no
circumstances may Group copy or share such data with others, or utilize such
data, in whole or in part, directly or indirectly, to negotiate rebates,
discounts, or contracts with pharmaceutical manufacturers or other suppliers of
pharmaceuticals.

 

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

 

2.10                           Reciprocity.

 

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

 

13

 

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

 

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

 

2.11                           Termination of Physician/Patient
Relationship.

 

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

 

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

 

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

 

(d)                                 Notwithstanding
the foregoing, when the consent of CMS or any other governmental agency to the
termination of a physician-patient relationship is required pursuant to

 

14

 

the rules and regulations governing the
Medicare Program or any other governmental program, neither Group nor a Group
Provider may terminate the physician-patient relationship with a Blue Shield 65
Plus Member or such other Member without first obtaining the consent of Blue
Shield, CMS, or as applicable, the other governmental agency.

 

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

 

2.13                           Disclosures.

 

(a)                                  In
addition to the notice obligation set forth in Paragraph 2.5, Group shall
notify Blue Shield immediately in writing when it becomes aware of the
occurrence of any of the following events: (i) Group’s or a Group Provider’s
liability insurance is canceled, terminated, not renewed, or materially
modified; (ii) Group or a Group Provider has become a defendant in a lawsuit
filed by a Member or is required or agrees to pay damages to a Member for any
reason; (iii) an act of nature or any event occurs which has a materially
adverse effect on Group’s ability to perform its obligations hereunder; (iv) a
petition is filed to declare Group bankrupt or for reorganization under the
bankruptcy laws of the United States or a receiver is appointed over all or any
portion of the Group’s assets; or (v) Group is sued, or suit is threatened in
writing, by a healthcare provider for nonpayment of compensation; or (vi) any
other situation arises which could reasonably be expected to materially affect
Group’s ability to carry out its obligations under this Agreement.  Group shall also provide Plan with thirty
(30) days’ advance notice of any proposed material change in the ownership of
Group, a change in its management services organization (if any), or the sale
of all or substantially all of the assets of the Group and obtain Plan’s prior
approval of same, which approval shall not be unreasonably withheld.

 

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

 

15

 

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

 

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

 

IV. PERFORMANCE OF DELEGATED FUNCTIONS

 

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

 

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

 

4.3                                 Termination of Delegation.

 

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

 

(b)                                 In
lieu of the notice of delegation with corrective action and opportunity to
correct deficiencies, as set forth in Paragraph 4.3(a) above, Blue Shield may
at anytime

 

17

 

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

 

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

 

V. OBLIGATIONS OF BLUE SHIELD

 

5.1                                 Directory and Use of Names.

 

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

 

18

 

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

 

5.2                                 Provider Manual.  Blue Shield shall develop a Provider Manual,
and Group and Group Providers shall comply with its provisions.  Blue Shield may, in its discretion,
periodically modify the Provider Manual by written notice to Group.  The Provider Manual, as so amended, is
incorporated herein by reference.  To
the extent of any conflict between this Agreement and the Provider Manual, the
terms of this Agreement shall govern. 
In the event Group reasonably concludes that a change in the Provider
Manual would have an adverse financial impact on the Group, then Group and Blue
Shield shall confer in good faith regarding the change.

 

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

 

5.4                                 Administrative Services.  Blue Shield shall perform those services
incident to the administration of a health care service plan including, but not
limited to, the processing of enrollment applications, assignment of Members to
PCPs, and the administration of claims for Covered Services which are not
Capitated Professional Services or Capitated Hospital Services.

 

VI. ELIGIBILITY OF
BLUE SHIELD MEMBERS

 

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

 

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

 

6.3                                 Eligibility List and Modifications.

 

(a)                                  Blue
Shield shall provide to Group on a monthly basis within ten days of the start
of the month, a member eligibility report and a member eligibility change
report, as further described in the Provider Manual.  These reports shall be submitted to the Group electronically,
unless both Blue Shield and the Group agree that it may be submitted in
writing.  Blue Shield shall attempt to
discourage retroactive

 

19

 

cancellation or retroactive addition of
Members.  However, Blue Shield may make
exceptions as may be necessary for administrative or business reasons.  Subsequent Capitation to Group will be
adjusted to reflect the retroactive addition or deletion of Members.  With the exception of retroactive changes
for Members enrolled in Blue Shield 65 Plus and those Members enrolled through
CalPERS and FEHBP, retroactive additions or deletions shall not exceed ninety
(90) days.

 

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

 

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

 

VII. COMPENSATION & FINANCIAL TERMS

 

7.1                                 Capitation Payments.

 

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

 

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

 

20

 

his/her applicable Copayment set forth
in the applicable Health Services Contract and Evidence of Coverage.

 

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

 

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

 

7.2                                 Services Other Than Capitated Professional
Services.

 

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

 

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

 

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

 

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

 

21

 

provide such stop loss coverage, by so
indicating on the Signature Page hereto, Blue Shield shall provide and charge
Group for stop loss coverage as set forth in Exhibit H.

 

7.5                                 Shared Savings Programs.

 

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

 

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

 

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

 

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

 

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

 

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

 

7.7                                 Third Party Liens.  In the event a Member seeks and obtains a
recovery from a third party or a third party’s insurer for injuries caused to
that Member, and only to the extent permitted by the Member’s Evidence of
Coverage and by California law, Group shall have

 

22

 

the right to assert a third party lien
for and to recover from the Member the reasonable value of Capitated Professional
Services provided to the Member by Group for the injuries caused by the third
party.  Group’s pursuit and recovery
under third party liens shall be conducted in strict accordance with the
procedures set forth in the Provider Manual. 
Blue Shield shall similarly have the right to assert a lien for and
recover for payments made by Blue Shield for such injuries.  Group shall cooperate with Blue Shield in
identifying such third party liability claims and in providing such
information, within such time frames, as set forth in the Provider Manual.

 

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

 

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

 

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

 

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

 

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

 

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

 

23

 

retain such withheld Capitation and
will continue to deduct from the Group’s Capitation and retain such deductions
as described in Exhibit C. from each quarter’s Capitation.  If at a later date Group resumes the timely
and complete submission of encounter data as required by this Agreement, then
Blue Shield will cease deducting these penalties from Group’s Capitation
beginning as of the month in which compliance is demonstrated by Group.

 

VIII. PROTECTION OF MEMBERS

 

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

 

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

 

8.3                                 Charges to Members.

 

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

 

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

 

24

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

25

 

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

 

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

 

8.9                                 Insurance.

 

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

 

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

 

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

 

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

 

26

 

IX. MEDICAL RECORDS & CONFIDENTIALITY

 

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

 

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

 

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

 

X. COOPERATION WITH AUDITS & CERTIFICATIONS

 

10.1                         Disclosure of Records.

 

(a)                                  Group
and each Group Provider shall comply with all provisions of the Omnibus
Reconciliation Act of 1980 regarding access to books, documents, and
records.  Without limiting the
foregoing, Group shall maintain such records and provide such information to
Blue Shield as well as to DMHC, CMS, any Peer Review Organization (“PRO”) with
which Blue Shield contracts as required byCMS, the

 

27

 

U.S. Comptroller General, their
designees and any other governmental officials entitled to such access by law
(collectively, “Governmental Officials”) as required by law and as may be
necessary for compliance by Blue Shield with the provisions of all state and
federal laws governing Blue Shield. 
Blue Shield and Government Officials shall have access to, and copies
of, at reasonable time upon request, the medical records, books, charts, and
papers relating to the Provider’s provision of health care services to Members,
the cost of such services, and payment received by the Provider from the Member
(or from others on their behalf), and to the financial condition of the
provider.  Such records described herein
shall be maintained at least six (6) years from the end of each Agreement Year,
and, if this Agreement is applicable to Blue Shield 65 Plus , six (6) years
from the close of CMS’ fiscal year in which the contract was in effect (or for
a particular record or group of records, a longer time period when or DMHC
requests such longer record retention and Group is notified of such request by
Blue Shield), and in no event for a shorter period than as may be required by
the Knox-Keene Act and the regulations promulgated thereunder.  All records of Group/Providers shall be
maintained in accordance with the general standards applicable to such book or
record keeping and shall be maintained during any governmental audit or
investigation.

 

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

 

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

 

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

 

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

 

10.3                           Accreditation Surveys.  Group and Group providers shall cooperate in
the manner described in Paragraphs 10.1 and 10.2 hereof with respect to surveys
and site evaluations relating to

 

28

 

accreditation of Blue Shield by NCQA or
any other accrediting organization. 
Further, Group agrees to implement any changes reasonably required as a
result of all such surveys.

 

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

 

XI. RESOLUTION OF
DISPUTES

 

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

 

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

 

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

 

29

 

XII. TERM & TERMINATION

 

12.1                           Term.  When executed by both parties, this
Agreement shall become effective as of the Effective Date, and shall continue
in effect for three (3) years thereafter, unless earlier terminated as set
forth below.  Unless either party
notifies the other party at least one hundred eighty (180) days prior to the
expiration of said initial three (3) year term, this Agreement shall, following
expiration of the initial term, continue in effect for additional one (1) year
terms until terminated as set forth below.

 

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

 

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

 

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

 

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

 

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

 

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

 

12.5                           Termination Not an Exclusive Remedy.  The termination of this Agreement by either
party pursuant to this Article XII is not an exclusive remedy and such
terminating party retains

 

30

 

whatever
rights in law or equity as may be necessary to enforce its rights under this
Agreement.

 

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

 

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

 

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

 

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

 

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

 

XIII. COMPLIANCE WITH LEGAL REQUIREMENTS

 

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

 

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

 

31

 

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

 

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

 

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

 

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

 

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

 

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

 

XIV. GENERAL PROVISIONS

 

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

 

14.2                           Amendments.  Except as provided in this Paragraph 14.2
and in Paragraphs 1.5 and 5.2, this Agreement may be amended only by mutual,
written consent of Blue Shield and Group’s

 

32

 

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

 

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

 

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

 

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

 

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

 

33

 

14.7                           Assignment, Subcontracting, and Addition
of PCPs.

 

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

 

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

 

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

 

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

 

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

 

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

 

34

 

create any additional obligations
whatsoever on the part of Blue Shield other than those obligations created
under other provisions of this Agreement.

 

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

 

	
  BLUE SHIELD OF CALIFORNIA

  GROUP

  	
   

  	
  PROFESSIONAL CARE IPA MEDICAL

  
	
   

  	
   

  	
   

  
	
  Signature:

  	
  /s/
  Lisa Farnan

  	
   

  	
   

  	
  Signature:

  	
  /s/ RICHARD SHINTO

  	
   

  
	
   

  	
   

  	
   

  
	
  Print Name:

  	
  Lisa Farnan

  	
   

  	
   

  	
  Print Name:

  	
  RICHARD SHINTO, MD

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
  VP, Provider Relations

  	
   

  	
   

  	
  Title:

  	
  MEDICAL DIRECTOR

  	
   

  
	
   

  	
   

  	
   

  
	
  Date:

  	
  2-25-03

  	
   

  	
   

  	
  Date:

  	
    2-19-03

  	
   

  
																

 

35

 

	
  group’s
  tax ID #: 
  E954378353

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  GROUP IS a:

  	
   

  	
  ý

  	
   

  	
  IPA

  	
  o

  	
   

  	
  Ltd. Knox-Keene Licensee

  
	
   

  	
   

  	
  o

  	
   

  	
  Integrated Medical Group

  	
  o

  	
   

  	
  Other (Specify):

  
	
   

  	
   

  	
  o

  	
   

  	
  Foundation

  	
   

  	
   

  	
   

  

 

in respect to the
professional stop loss coverage (and applicable charges by plan), the group
elects as follows:

 

The Professional
Stop Loss Coverage set forth in Schedule I:

 

	
   

  	
   

  	
  o

  	
   

  	
  Will Participate

  	
  ý

  	
   

  	
  Will not Participate

  

 

36

 

Exhibit A

 

HMO IPA/Medical Group Agreement

GROUP INFORMATION & BENEFIT PROGRAMS

PROFESSIONAL CARE IPA MEDICAL GROUP

Effective Date:                  JANUARY
1, 2003

 

1.                                       Address
for Notice:

 

 

	
  If to Blue
  Shield 

  	
  If to Group

  
	
  Blue Shield of California  

  	
  Professional Care IPA Medical Group
  

  
	
  6701 Center Drive West  

  	
  C/o NAMM  

  
	
  Los Angeles, CA 90045  

  	
  12750 Center Court Drive, #300,
  Cerritos, CA 90703  

  
	
  Attn:  Regional Executive  

  	
  Attn: President  

  
	
  Fax No.: 310-670-2329  

  	
  Fax No: (562) 865-5730  

  

 

2.                                       (a)                                  Group
Regions:

 

(b)                                 Zip
Codes (By Group Regions, if applicable)*: See Exhibit A-1

 

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

 

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

 

(2)                                  Healthy
Families      ý   Yes     o    No

	
   

  

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

 

(3)                                  Other
(Describe)

 

 

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

 

37

 

EXHIBIT A-l

 

PLAN SERVICE
AREA

 

PROFESSIONAL
CARE IPA MEDICAL GROUP

 

Effective Date: January 1, 2003

The
Service Area consists of the following geographic area (city/zip code):

 

	
  Alhambra

  	
   

  	
  91801-804

  
	
   

  	
   

  	
  91841

  
	
   

  	
   

  	
  91896

  
	
   

  	
   

  	
  91899

  
	
  Alta Loma

  	
   

  	
  91701

  
	
   

  	
   

  	
  91737

  
	
  Altadena

  	
   

  	
  91001

  
	
   

  	
   

  	
  91003

  
	
  Anaheim

  	
   

  	
  92801-808

  
	
   

  	
   

  	
  92812

  
	
   

  	
   

  	
  92814-817

  
	
   

  	
   

  	
  92825

  
	
   

  	
   

  	
  92850

  
	
   

  	
   

  	
  92899

  
	
  Arcadia

  	
   

  	
  91006-007

  
	
   

  	
   

  	
  91066

  
	
   

  	
   

  	
  91077

  
	
  Artesia

  	
   

  	
  90701

  
	
   

  	
   

  	
  90702

  
	
  Atwood

  	
   

  	
  92811

  
	
  Azusa

  	
   

  	
  91702

  
	
  Baldwin Park

  	
   

  	
  91706

  
	
  Bell

  	
   

  	
  90201

  
	
  Bell Gardens

  	
   

  	
  90202

  
	
  Bellflower

  	
   

  	
  90706-707

  
	
  Beverly Hills

  	
   

  	
  90209-213

  
	
  Brea

  	
   

  	
  92821-823

  
	
  Buena Park

  	
   

  	
  90620-622

  
	
   

  	
   

  	
  90624

  
	
  Burbank

  	
   

  	
  91501-508

  
	
   

  	
   

  	
  91510

  
	
   

  	
   

  	
  91521-523

  
	
   

  	
   

  	
  91526

  
	
  Carson

  	
   

  	
  90745-747

  
	
   

  	
   

  	
  90749

  
	
  Cerritos

  	
   

  	
  90703

  
	
  Chino

  	
   

  	
  91708

  
	
   

  	
   

  	
  91710

  
	
  Chino Hills

  	
   

  	
  91709

  
	
  City Of Industry

  	
   

  	
  91714-716

  
	
  Claremont

  	
   

  	
  91711

  
	
  Compton

  	
   

  	
  90220-224

  
	
  Corona

  	
   

  	
  91718-720

  
	
   

  	
   

  	
  92877-883

  
	
  Corona Del Mar

  	
   

  	
  92625

  
	
  Costa Mesa

  	
   

  	
  92626-628

  
	
  Covina

  	
   

  	
  91722-724

  
	
  Culver City

  	
   

  	
  90230-233

  
	
  Cypress

  	
   

  	
  90630

  
	
  Diamond Bar

  	
   

  	
  91765

  
	
  Downey

  	
   

  	
  90239-242

  
	
  Duarte

  	
   

  	
  91009-010

  
	
  East Irvine

  	
   

  	
  92650

  
	
  El Monte

  	
   

  	
  91731-735

  
	
  El Segundo

  	
   

  	
  90245

  
	
  Encino

  	
   

  	
  91436

  
	
  Foothill Ranch

  	
   

  	
  92610

  
	
  Fountain Valley

  	
   

  	
  92708

  
	
   

  	
   

  	
  92728

  
	
  Fullerton

  	
   

  	
  92831-838

  
	
  Garden Grove

  	
   

  	
  92840-846

  
	
  Gardena

  	
   

  	
  90247-249

  
	
  Glendale

  	
   

  	
  91201-210

  
	
   

  	
   

  	
  91221-222

  
	
   

  	
   

  	
  91225-226

  
	
  Glendora

  	
   

  	
  91740-741

  
	
  Guasti

  	
   

  	
  91743

  
	
  Hacienda Heights

  	
   

  	
  91745

  
	
  Harbor City

  	
   

  	
  90710

  
	
  Hawaiian Gardens

  	
   

  	
  90716

  
	
  Hawthorne

  	
   

  	
  90250-251

  
	
  Hermosa Beach

  	
   

  	
  90254

  
	
  Huntington Beach

  	
   

  	
  92605

  
	
   

  	
   

  	
  92615

  
	
   

  	
   

  	
  92646-649

  
	
  Huntington Park

  	
   

  	
  90255

  
	
  Inglewood

  	
   

  	
  90301-313

  
	
   

  	
   

  	
  90397-398

  
	
  Irvine

  	
   

  	
  92602-604

  
	
   

  	
   

  	
  92606

  
	
   

  	
   

  	
  92612

  
	
   

  	
   

  	
  92614

  
	
   

  	
   

  	
  92616

  
	
   

  	
   

  	
  92618-620

  
	
   

  	
   

  	
  92623

  
	
   

  	
   

  	
  92697

  
	
   

  	
   

  	
  92709

  
	
   

  	
   

  	
  92710

  
	
  La Canada Flintridge

  	
   

  	
  91011-012

  
	
  La Crescenta

  	
   

  	
  91214

  
	
   

  	
   

  	
  91224

  
	
  La Habra

  	
   

  	
  90631-633

  
	
  La Mirada

  	
   

  	
  90637-639

  
	
  La Palma

  	
   

  	
  90623

  
	
  La Puente

  	
   

  	
  91744

  
	
   

  	
   

  	
  91746-747

  
	
   

  	
   

  	
  91749-750

  
	
  Lake Forest

  	
   

  	
  92630

  
	
  Lakewood

  	
   

  	
  90711-715

  
	
  Lawndale

  	
   

  	
  90260

  
	
   

  	
   

  	
  90261

  
	
  Lomita

  	
   

  	
  90717

  
	
  Long Beach

  	
   

  	
  90801-810

  
	
   

  	
   

  	
  90813-815

  
	
   

  	
   

  	
  90822

  
	
   

  	
   

  	
  90831-835

  
	
   

  	
   

  	
  90840

  
	
   

  	
   

  	
  90842

  
	
   

  	
   

  	
  90844-848

  
	
   

  	
   

  	
  90853

  
	
   

  	
   

  	
  90888

  
	
  Los Alamitos

  	
   

  	
  90720-721

  
	
  Los Angeles

  	
   

  	
  90001-068

  
	
   

  	
   

  	
  90070-089

  
	
   

  	
   

  	
  90091

  
	
   

  	
   

  	
  90093-097

  
	
   

  	
   

  	
  90099

  
	
   

  	
   

  	
  90101-103

  
	
   

  	
   

  	
  90174

  
	
   

  	
   

  	
  90185

  
	
  Lynwood

  	
   

  	
  90262

  
	
  Manhattan Beach

  	
   

  	
  90266-267

  
	
  Marina Del Rey

  	
   

  	
  90292

  
	
   

  	
   

  	
  90295

  
	
  Maywood

  	
   

  	
  90270

  
	
  Midway City

  	
   

  	
  92655

  
	
  Mira Loma

  	
   

  	
  91752

  
	
  Monrovia

  	
   

  	
  91016-017

  
	
  Montclair

  	
   

  	
  91763

  
	
  Montebello

  	
   

  	
  90640

  
	
  Monterey Park

  	
   

  	
  91754-756

  
	
  Montrose

  	
   

  	
  91020-021

  
	
  Mount Wilson

  	
   

  	
  91023

  
	
  Newport Beach

  	
   

  	
  92658-663

  
	
  Norco

  	
   

  	
  91760

  
					

 

 

38

 

	 
	
  Norco

  	
   

  	
  92860

  
	 
	
  North
  Hills

  	
   

  	
  91393

  
	 
	
  North
  Hollywood

  	
   

  	
  91601-603

  
	 
	
   

  	
   

  	
  91605-606

  
	 
	
   

  	
   

  	
  91609

  
	 
	
   

  	
   

  	
  91611-612

  
	 
	
   

  	
   

  	
  91615-616

  
	 
	
   

  	
   

  	
  91618

  
	 
	
  Norwalk

  	
   

  	
  90650-652

  
	 
	
   

  	
   

  	
  90659

  
	 
	
  Ontario

  	
   

  	
  91758

  
	 
	
   

  	
   

  	
  91761

  
	 
	
   

  	
   

  	
  91762

  
	 
	
   

  	
   

  	
  91764

  
	 
	
   

  	
   

  	
  91798

  
	 
	
  Orange

  	
   

  	
  92856-857

  
	 
	
   

  	
   

  	
  92859

  
	 
	
   

  	
   

  	
  92862-869

  
	 
	
  Pacific
  Palisades

  	
   

  	
  90272

  
	 
	
  Pacoima

  	
   

  	
  91334

  
	 
	
  Palos
  Verdes Peninsula

  	
   

  	
  90274

  
	 
	
  Paramount

  	
   

  	
  90723

  
	 
	
  Pasadena

  	
   

  	
  91050-051

  
	 
	
   

  	
   

  	
  91101-107

  
	 
	
   

  	
   

  	
  91109-110

  
	 
	
   

  	
   

  	
  91114-117

  
	 
	
   

  	
   

  	
  91121

  
	 
	
   

  	
   

  	
  91123-126

  
	 
	
   

  	
   

  	
  91129

  
	 
	
   

  	
   

  	
  91131

  
	 
	
   

  	
   

  	
  91175

  
	 
	
   

  	
   

  	
  91182

  
	 
	
   

  	
   

  	
  91184-189

  
	 
	
   

  	
   

  	
  91191

  
	 
	
  Pico
  Rivera

  	
   

  	
  90660-662

  
	 
	
   

  	
   

  	
  90665

  
	 
	
  Placentia

  	
   

  	
  92870
  871

  
	 
	
  Playa Del
  Rey

  	
   

  	
  90293

  
	 
	
   

  	
   

  	
  90296

  
	 
	
  Pomona

  	
   

  	
  91766-769

  
	 
	
   

  	
   

  	
  91797

  
	 
	
   

  	
   

  	
  91799

  
	 
	
  Rancho
  Cucamonga

  	
   

  	
  91729-730

  
	 
	
  Rancho
  Palos Verdes

  	
   

  	
  90275

  
	 
	
  Redondo
  Beach

  	
   

  	
  90277-278

  
	 
	
  Rosemead

  	
   

  	
  91770-772

  
	 
	
  Rowland
  Heights

  	
   

  	
  91748

  
	 
	
  San Dimas

  	
   

  	
  91773

  
	 
	
  San
  Gabriel

  	
   

  	
  91775-776

  
	 
	
   

  	
   

  	
  91778

  
	 
	
  San Marino

  	
   

  	
  91108

  
	 
	
   

  	
   

  	
  91118

  
	 
	
  San
  Pedro

  	
   

  	
  90731-734

  
	 
	
  Santa
  Ana

  	
   

  	
  92701-707

  
	 
	
   

  	
   

  	
  92711-712

  
	 
	
   

  	
   

  	
  92735

  
	 
	
   

  	
   

  	
  92799

  
	 
	
  Santa Fe Springs

  	
   

  	
  90670-671

  
	 
	
  Seal Beach

  	
   

  	
  90740

  
	 
	
  Sherman Oaks

  	
   

  	
  91403

  
	 
	
   

  	
   

  	
  91413

  
	
  Sherman
  Oaks

  	
   

  	
  91423

  
	
   

  	
   

  	
  91495

  
	
  Sierra
  Madre

  	
   

  	
  91024-025

  
	
  Silverado

  	
   

  	
  92676

  
	
  South El
  Monte

  	
   

  	
  91733

  
	
  South Gate

  	
   

  	
  90280

  
	
  South
  Pasadena

  	
   

  	
  91030-031

  
	
  Stanton

  	
   

  	
  90680

  
	
  Studio
  City

  	
   

  	
  91604

  
	
   

  	
   

  	
  91614

  
	
  Sun Valley

  	
   

  	
  91352-353

  
	
  Sunland

  	
   

  	
  91040-041

  
	
  Sunset
  Beach

  	
   

  	
  90742

  
	
  Surfside

  	
   

  	
  90743

  
	
  Temple
  City

  	
   

  	
  91780

  
	
  Toluca
  Lake

  	
   

  	
  91610

  
	
  Torrance

  	
   

  	
  90501-510

  
	
  Tujunga

  	
   

  	
  91042-043

  
	
  Tustin

  	
   

  	
  92780-782

  
	
  Universal
  City

  	
   

  	
  91608

  
	
  Upland

  	
   

  	
  91784-786

  
	
  Valley
  Village

  	
   

  	
  91607

  
	
   

  	
   

  	
  91617

  
	
  Van Nuys

  	
   

  	
  91388

  
	
   

  	
   

  	
  91401

  
	
   

  	
   

  	
  91404-405

  
	
   

  	
   

  	
  91407-411

  
	
   

  	
   

  	
  91470

  
	
   

  	
   

  	
  91482

  
	
   

  	
   

  	
  91496-497

  
	
   

  	
   

  	
  91499

  
	
  Venice

  	
   

  	
  90291

  
	
   

  	
   

  	
  90294

  
	
  Verdugo
  City

  	
   

  	
  91046

  
	
  Villa Park

  	
   

  	
  92861

  
	
  Walnut

  	
   

  	
  91788-789

  
	
   

  	
   

  	
  91795

  
	
  West
  Covina

  	
   

  	
  91790-793

  
	
  West
  Hollywood

  	
   

  	
  90069

  
	
  Westminster

  	
   

  	
  92683-685

  
	
  Whittier

  	
   

  	
  90601-610

  
	
   

  	
   

  	
  90612

  
	
  Wilmington

  	
   

  	
  90744

  
	
   

  	
   

  	
  90748

  
	
  Yorba
  Linda

  	
   

  	
  92885-887

  
				

 

The Service Area outlined in this
Exhibit A-l may be updated periodically to reflect changes in IPA Provider
locations and/or Zip Code additions or deletions identified by Plan or the U.S.
Postal Service.

 

39

 

 

EXHIBIT C

HMO IPA/Medical Group Agreement

 

CAPITATION

PROFESSIONAL CARE IPA MEDICAL GROUP

Effective
Date: January 1, 2003

CAPITATION
PAYMENTS

 

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

 

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

 

ENCOUNTER DATA
SUBMISSION PENALTIES

 

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

 

***

 

44

 

Exhibit C-
l

 

HMO IPA/Medical
Group Agreement

Capitation Rates for Professional Care IPA - 385U9

Effective Date: 01/01/2003

 

As of 01/01/2003, the effective net yield (which includes the
deduction for Stop Loss, if applicable) for the following PMPMs  and
factors are *** for the HMO Group, *** for HMO IFP, *** for POS, and *** pmpm
in aggregate, based on the 08/01/2002 membership.

 

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

 

A. Members Other Than Blue Shield 65 Plus Members

 

	
  Age & Sex Categories and Capitation Fees

  	
   

  
	
  Category

  	
   

  	
  Age/Sex Adjusted Capitation (PMPM)

  	
   

  
	
  Sex

  	
   

  	
  Age

  	
   

  	
  Group

  (non-POS)

  	
   

  	
  IFP

  (non-POS)

  	
   

  	
  POS

  (In-network)

  	
   

  
	
  F

  	
   

  	
  0 - 1

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  F

  	
   

  	
  2 - 6

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  F

  	
   

  	
  7 - 18

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  F

  	
   

  	
  19 - 21

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  F

  	
   

  	
  22 - 24

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  F

  	
   

  	
  25 - 29

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  F

  	
   

  	
  30 - 34

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  F

  	
   

  	
  35 - 39

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  F

  	
   

  	
  40 - 44

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  F

  	
   

  	
  45 - 49

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  F

  	
   

  	
  50 - 54

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  F

  	
   

  	
  55 - 59

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  F

  	
   

  	
  60 - 64

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  F

  	
   

  	
  65 + (NM)

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  F

  	
   

  	
  65 + (M) *

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  M

  	
   

  	
  0 - 1

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  M

  	
   

  	
  2 - 6

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  M

  	
   

  	
  7 - 18

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  M

  	
   

  	
  19 - 21

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  M

  	
   

  	
  22 - 24

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  M

  	
   

  	
  25 - 29

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  M

  	
   

  	
  30 - 34

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  M

  	
   

  	
  35 - 39

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  M

  	
   

  	
  40 - 44

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  M

  	
   

  	
  45 - 49

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  M

  	
   

  	
  50 - 54

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  M

  	
   

  	
  55 - 59

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  M

  	
   

  	
  60 - 64

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  M

  	
   

  	
  65 + (NM)

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  M

  	
   

  	
  65 + (M) *

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
														

 

*Medicare Primary

 

	
  Benefit /
  Rate Adjustment

  	
   

  
	
  Office
  Visit Copay Factor

  	
   

  
	
  Office Visit

  Copay

  	
   

  	
  Factor

  	
   

  
	
  $0

  	
   

  	
  1.081

  	
   

  
	
  $1

  	
   

  	
  1.071

  	
   

  
	
  $2

  	
   

  	
  1 061

  	
   

  
	
  $3

  	
   

  	
  1.052

  	
   

  
	
  $4

  	
   

  	
  1.043

  	
   

  
	
  $5

  	
   

  	
  1.034

  	
   

  
	
  $6

  	
   

  	
  1.026

  	
   

  
	
  $7

  	
   

  	
  1.017

  	
   

  
	
  $8

  	
   

  	
  1 009

  	
   

  
	
  $9

  	
   

  	
  1.001

  	
   

  
	
  $10

  	
   

  	
  0.994

  	
   

  
	
  $11

  	
   

  	
  0.986

  	
   

  
	
  $12

  	
   

  	
  0.979

  	
   

  
	
  $13

  	
   

  	
  0.972

  	
   

  
	
  $14

  	
   

  	
  0.965

  	
   

  
	
  $15

  	
   

  	
  0.958

  	
   

  
	
  $16

  	
   

  	
  0.951

  	
   

  
	
  $17

  	
   

  	
  0.944

  	
   

  
	
  $18

  	
   

  	
  0.937

  	
   

  
	
  $19

  	
   

  	
  0.930

  	
   

  
	
  $20

  	
   

  	
  0.923

  	
   

  
	
  $21

  	
   

  	
  0.917

  	
   

  
	
  $22

  	
   

  	
  0.910

  	
   

  
	
  $23

  	
   

  	
  0.903

  	
   

  
	
  $24

  	
   

  	
  0.897

  	
   

  
	
  $25

  	
   

  	
  0.890

  	
   

  
	
  $30

  	
   

  	
  0.858

  	
   

  
	
  $35

  	
   

  	
  0.825

  	
   

  
	
  $40

  	
   

  	
  0.793

  	
   

  
	
  $45

  	
   

  	
  0.760

  	
   

  
	
  $50

  	
   

  	
  0.728

  	
   

  

 

45

 

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

 

	
  Age:

  	
   

  	
  0-12
  months

  	
   

  	
  $
  *** PMPM

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Age:

  	
   

  	
  >
  1 year

  	
   

  	
  $***  PMPM

  

 

 

B.           Blue Shield 65 Plus Members – Basic Capitation

 

NA
percent (NA %) of the Monthly CMS Capitation received by Blue Shield
from CMS and the equivalent percentage of the actual Monthly Blue Shield 65
Plus Premium (as described below) which Blue Shield determines, according to
its actuarial standards and methodology, to be for a benefit that is included
in the Member’s basic benefit plan and for which Group bears financial
risk.  Blue Shield will retain 100% of
premiums collected for benefits considered supplemental to the basic benefit
plan (as described below).  Blue Shield
may make monthly retroactive adjustments to reflect any retroactive adjustments
made by CMS to the Monthly CMS Capitation.

 

The
“Monthly CMS Capitation” refers to the monthly premium payment made by CMS to
Blue Shield as payment to Blue Shield for the provision of services to the Blue
Shield 65 Plus Members enrolled in Blue Shield.

 

The “Monthly Blue Shield 65 Plus
Premium Payments” refers those additional premium payments which Blue Shield
receives directly from the member or from the employer group for basic benefit
plan provisions.

 

“Supplemental Benefits” are
benefits offered to enhance the basic benefit provided by Blue Shield in the
Member’s county of residence. 
Additional premiums (beyond the base plan premium, if applicable) are
collected from Members and employer groups for such benefits.  Group shall have no financial responsibility
for the administration and/or delivery of such benefits.

 

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

 

46

 

Exhibit D

 

HMO IPA/Medical Group Agreement

 

SHARED
SAVINGS PROGRAMS

 

PROFESSIONAL CARE IPA MEDICAL GROUP

 

Effective Date:   JANUARY
1, 2003

 

A.                                    COMMERCIAL MEMBERS

 

FUNDING: For Members other than
those enrolled in Blue Shield 65 Plus plans and Blue Shield POS Benefit
Programs, Blue Shield will allocate to a Shared Savings Fund a per Member per
month amount set forth in Exhibit D-l for all Members assigned to Group,
subject to retroactive adjustments either upward or downward due to retroactive
changes in membership.  [See Exhibit G-2
for provisions relating to Blue Shield POS Benefit Programs and POS Shared
Savings Funds.] See. Section 6.3 Eligibility List and Modifications.

 

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

 

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

 

Surplus: If
the total actual cost of Shared Savings Services is less than the total
allocation to the Shared Savings Fund, then Group shall be entitled to *** of
the amount by which the allocation exceeds the costs, minus any carry forward
resulting from deficits from previous Agreement years.

 

47

 

Deficit:  If the total actual cost of Shared Savings
services is more than the total allocation to the Shared Savings Fund, then ***
of the amount, not to exceed ***  of
the HMO Capitation Fees, by which the actual costs exceed the total allocation
shall be allocated to Group and shall be handled as follows: (i) the excess may
be deducted from any other settlements or payments, except capitation and
Professional Stop Loss Program payments made pursuant to Exhibit H, due to Group
from Blue Shield, and, (ii) any remaining amounts shall be carried forward into
future Agreement years and shall be deducted from any Shared Savings payments
to Group in future years.  Upon
non-renewal or termination, such deficits shall not be collected by Blue Shield
from Group.

 

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

 

B.                                    BLUE SHIELD 65 PLUS MEMBERS

 

FUNDING:  For Members enrolled in Blue Shield 65 Plus plans, Blue Shield
will allocate to a Shared Savings Fund a per Member per month percentage amount
set forth in Exhibit D-2 for all Members assigned to Group, subject to
retroactive adjustments either upward or downward due to retroactive changes in
membership.

 

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

 

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

 

Surplus:  If the total actual cost of Shared Savings
Services is less than the total allocation to the Shared Savings Fund, then
Group shall be entitled to NA

 

48

 

 

percent (NA) of the amount by which the
allocation exceeds the costs, minus any carry forward resulting from deficits
from previous Agreement years.

 

Deficit:  If the total actual cost of Shared Savings
Services is more than the total allocation to the Shared Savings Fund, then NA
percent (NA) of the amount by which the actual costs exceed the total
allocation shall be allocated to Group and shall be handled as follows: (i) the
excess may be deducted from any other settlements or payments, except
capitation and Professional Stop Loss Program payments made pursuant to Exhibit
I, due to Group from Blue Shield, and, (ii) any remaining amounts shall be
carried forward into future Agreement years and shall be deducted from any Shared
Savings payments to Group in future years.

 

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

 

C.                                    PHARMACY SHARED SAVINGS FUND

 

FUNDING:  For Members enrolled in Blue Shield 65 Plus,
Blue Shield will allocate to a separately administered Pharmacy Shared Savings
Fund a per member per month percentage amount as set forth in Exhibit D-3 for
all Members assigned to Group.  All
membership is subject to retroactive adjustments either upward or downward due
to retroactive changes in membership.

 

CHARGING OF PAYMENTS:  Blue Shield will charge against the Pharmacy
Shared Savings Fund the actual cost paid by Blue Shield for outpatient
prescription drug services provided to assigned members, as well as a
reasonable allowance, as determined by Blue Shield’s actuaries, for incurred
but not paid (IBNP) outpatient prescription drug claims.  Pharmacy costs include the ingredient cost for
Covered Services rendered to Members for which the Pharmacy Shared Savings Fund
is financially responsible per Exhibit B, professional dispensing fees paid to
participating pharmacies, less associated pharmacy co-payment revenue: Any
costs for outpatient prescription drug services not included in any annual
settlement shall be carried forward and included in the Pharmacy Risk Fund
settlement for the succeeding Agreement Year. 
In addition, if this Agreement is replaced or superceded any other
agreement between the parties which contained a risk sharing arrangement for
similar services; then the following shall also be charged against the Shared
Savings Fund described herein: (I) any deficit in the final settlement of that
risk sharing arrangement and, (ii) any claims for risk services which were
incurred but not included in the settlement of the risk arrangement in the
prior agreement.

 

PHARMACY RISK FUND
SETTLEMENT:  The Pharmacy Shared Savings
Fund shall be settled on an annual basis, within one hundred eighty (180) days
following the end of each annual term of the Agreement (being a 120 day claims
run out and a 60 day determination period). 
In the event of termination of the Agreement for any reason, final settlement
of the

 

49

 

Pharmacy Risk Fund shall be performed
one hundred fifty (150) days after the date of termination and any amounts due
from Blue Shield to Group shall be paid within thirty (30) days thereafter.

 

Surplus:  If the total actual cost of outpatient
prescription drugs is less than the total allocation to the Pharmacy Risk Fund,
then Group shall be entitled to NA percent (NA) of the amount by which
the allocation exceeds the costs, minus any carry forward resulting from
deficits from previous Agreement years.

 

Deficit:  If the total actual cost of Pharmacy Shared
Savings services is more than the total allocation to the Pharmacy Shared
Savings Fund, then NA percent (NA) of the amount by which the actual
costs exceed the total allocation shall be allocated to Group and shall be
handled as follows: (i) the excess may be deducted from any other settlements
or payments, except capitation and Professional Stop Loss Program payments made
pursuant to Exhibit I, due to Group from Blue Shield, and, (ii) any remaining,
amounts shall be carried forward into future Agreement years and shall be
deducted from Pharmacy Shared Savings Payments to Group in future years.

 

SUMMARIES &
SETTLEMENTS:  Blue Shield shall provide
to Group, as further described in the Provider Manual, on a quarterly basis, a
summary of the Pharmacy Shared savings expenses along with a comparison to the
Pharmacy Shared Savings Funding and utilization data pertaining to the cost of
prescriptions written on a physician specific basis.  Blue Shield shall also provide to Group a Shared Savings Annual
Settlement.

 

50

 

Exhibit D-1

 

HMO IPA/Medical Group Agreement

Shared Savings Fund Allocations for Professional Care IPA -
385U9

Effective Date: 01/01/2003

 

As of 01/01/2003, the
effective net yield (which includes the deduction for Stop Loss, if applicable)
for the following PMPMs are *** for the HMO Group, and *** for the HMO IFP,
based on the 08/01/2002 membership.

 

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

 

Members Other Than
Blue Shield 65 Plus Members

 

*Medicare Primary

 

Age &
Sex Categories and Shared Savings Allocations

 

	
  Category

  	
   

  	
  Shared
  Savings Allocation (PMPM)

  	
   

  
	
  Sex

  	
   

  	
  Age

  	
   

  	
  Group

  (non-POS)

  	
   

  	
  IFP

  (non-POS)

  	
   

  
	
  F

  	
   

  	
  0-1

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  F

  	
   

  	
  2 - 6

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  F

  	
   

  	
  7- 18

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  F

  	
   

  	
  19-21

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  F

  	
   

  	
  22 -24

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  F

  	
   

  	
  25 - 29

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  F

  	
   

  	
  30 - 34

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  F

  	
   

  	
  35 - 39

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  F

  	
   

  	
  40 - 44

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  F

  	
   

  	
  45 - 49

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  F

  	
   

  	
  50 - 54

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  F

  	
   

  	
  55 - 59

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  F

  	
   

  	
  60 - 64

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  F

  	
   

  	
  65 + (NM)

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  F

  	
   

  	
  65 + (M*)

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  M

  	
   

  	
  0 - 1

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  M

  	
   

  	
  2 - 6

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  M

  	
   

  	
  7 - 18

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  M

  	
   

  	
  19 - 21

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  M

  	
   

  	
  22 - 24

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  M

  	
   

  	
  25 - 29

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  M

  	
   

  	
  30 - 34

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  M

  	
   

  	
  35 - 39

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  M

  	
   

  	
  40 - 44

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  M

  	
   

  	
  45 - 49

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  M

  	
   

  	
  50 - 54

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  M

  	
   

  	
  55 - 59

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  M

  	
   

  	
  60 - 64

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  M

  	
   

  	
  65 + (NM)

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  M

  	
   

  	
  65 + (M)*

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
											

 

51

 

Exhibit D-2

 

HMO
IPA/Medical Group Agreement 

 

SHARED
SAVINGS FUND ALLOCATIONS

 

PROFESSIONAL
CARE IPA MEDICAL GROUP

 

Effective Date:  
January 1, 2003

blue shield 65 plus members

 

NA
percent  
(        %) of the Monthly CMS
Capitation received by Blue

 

Shield from CMS
and                       
percent (           %) of the
monthly premium received by  Blue Shield from the Member or from an
Employer Group which Blue Shield determines, according to its actuarial
standards and methodology, to be for a benefit that is designated as a Shared
Savings Service in Exhibit B.

 

52

 

Exhibit D-3

 

HMO IPA/Medical Group Agreement

 

PHARMACY SHARED SAVINGS FUND ALLOCATIONS

 

PROFESSIONAL CARE IPA MEDICAL GROUP

 

Effective
Date:                 

 

blue shield 65 plus members

 

NA
percent  
(               %)
of the Monthly CMS Capitation received by Blue  Shield from CMS
and                              percent
(       %) of the monthly premium received
by  Blue Shield from the Member or
from an Employer Group which Blue Shield determines, according to its actuarial
standards and methodology, to be for outpatient prescription drug services.

 

53

 

Exhibit
E

 

HMO IPA/Medical Group Agreement

BLUE SHIELD ALLOWABLE RATES

PROFESSIONAL CARE IPA MEDICAL GROUP

Effective Date:                  JANUARY 1, 2003

 

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

 

The lesser of one-hundred percent
(100%) of the Blue Shield PPO Physician Allowances in effect on the date of
service, or the amount paid by the Group (or Group Provider) for the services,
if any, (excluding Capitation payment), minus the Member’s/individual’s
applicable copayment, coinsurance or deductible.  Further detail regarding Blue Shield’s proprietary fee schedule
is provided upon request.

 

***

 

54

 

Exhibit F

 

HMO IPA/Medical Group
Agreement

DELEGATION RESPONSIBILITIES

PROFESSIONAL CARE IPA MEDICAL GROUP

Effective Date:   JANUARY 1.2003

 

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

 

	
   

  	
   

  	
  Commercial

  	
   

  	
  Blue
  Shield 65 Plus

  	
   

  
	
  UM/Professional

  	
   

  	
  2.0

  	
  %

  	
  NA

  	
   

  
	
  UM/Shared
  Savings

  	
   

  	
  2.0

  	
  %

  	
  NA

  	
   

  
	
  Credentialing

  	
   

  	
  .5

  	
  %

  	
  NA

  	
   

  
	
  Claims
  Processing 

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Claims
  Processing Non contracted only penalty

  	
   

  	
  .5

  	
  %

  	
  NA

  	
   

  
	
  All Claims
  penalty

  	
   

  	
  5.0

  	
  %

  	
  NA

  	
   

  
	
  Non contracted
  only payment withhold*

  	
   

  	
  8.5

  	
  %

  	
  NA

  	
   

  
	
  All Claims payment withhold*

  	
   

  	
  85.0

  	
  %

  	
  NA

  	
   

  

 

*Subject to actual claims paid
experience.

 

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

 

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

 

55

 

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

 

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

 

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

 

5.                                       Blue
Shield Request for Records, Files and Reports Related to Delegated
Credentialing and Recredentialing.  Blue Shield shall be entitled to conduct audits of Group’s
compliance with the criteria and standards of Delegated Credentialing and
Recredentialing.  Upon advance notice
from Blue Shield, Group shall provide reasonable access during regular business
hours to credentialing files, as reasonably necessary to evaluate Group’s
performance of it’s delegated activities. 
Upon request from Blue Shield, Group shall submit copies of
credentialing/recredentialing files for review by governmental, accrediting and
regulatory review agencies.  If such
request is twenty-five (25) records or more, Blue Shield shall reimburse Group
ten (10) cents per page.  Submission of
documents by Group will be within the required timeframe of the requesting
agency.  Group shall participate in an
annual evaluation and quarterly meetings between Blue Shield and Group staff.  In addition, Group shall provide to Blue
Shield periodic reports on delegated activities as set forth in the Provider
Manual.  Group shall take such
corrective actions as requested by Blue Shield through the audit review process
within such time lines as established by Blue Shield.

 

56

 

ATTACHMENT I TO EXHIBIT F

 

BLUE
SHIELD OF CALIFORNIA

QUALITY MANAGEMENT (QM) REQUIREMENTS*

 

 

	
  QI Standard per BSC

  	
   

  	
  Activities
  Performed by Group

  	
   

  	
  Group
  Reporting

  Frequency to BSC

  	
   

  	
  BSC
  Oversight

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.  Program Structure

  	
   

  	
  •                  Written QM Program

  •                  QM Program accountable

  to Governing Body.

  •                  Program evaluated

  annually and updated.

  •                  Designated physician has

  substantial involvement.

  •                  QM committee meets

  quarterly, at a minimum.

  •                  Annual QM work plan.
Annual QM
  evaluation.        

  	
   

  	
  •                  Submit QM
Program

  annually.

  •                  Submit
workplan

  annually.

  •                  Submit
program

  evaluation

  annually.

  	
   

  	
  1.  Review and approval of:

  •                  Program

  •                  Work plan

  •                  Annual evaluation

  •                  QI Policies

  •                  QI Procedures

  •                  Clinical Guidelines

  •                  Access Guidelines

  
	
  2.  Program Operations

  	
   

  	
  •                  Provider QI Committee

  recommends policy

  decisions, reviews QI
activities, institutes needed

  actions and ensures follow-up.

  •                  Contemporaneous, signed

  and dated minutes.

  •                  Physicians actively

  participate in QI program.

  •                  QI program coordinates
monitoring activity

  throughout organization.

  	
   

  	
  •                  Group policies
and procedures
related to QI
submitted

  annually and
any updates
and changes

  submitted

  quarterly.

  •                  Annual Report

  to include

  monitoring

  activities and

  results, and

  improvements.

  	
   

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

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

  
	
  3.  Health Services

  Contracts

  	
   

  	
  •                  Negotiate contracts with
subcontractors if written

  prior approval obtained
from BSC.

  •                  Include in contract

  w/subcontracted vendors

  the requirement that the
subcontracted vendor is

  obligated to participate in

  and be compliant with the
BSC QI process and
findings.

  	
   

  	
   

  	
   

  	
  Prospective review and approval 

  of BSC contract for appropriate

  contract language

  
	
  4.  Availability of Primary

  Care Practitioners

  	
   

  	
  •                  Access studies

  •                  Keep BSC aware of closed
PCP practices.

  •                  Keep BSC aware of

  changes in status of

  contracted providers.

  	
   

  	
   

  	
   

  	
  •                  Review of open/closed panels

  •                  Monitoring of patient
geographic access to PCP and
  specialists offices

  •                  Monitoring of appropriate

  referrals to out-of-network

  providers

  •                  Review of patient complaint

  trends re: access and
availability to care and
  services.

  •                  Review of results of access

  studies

  

 

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

 

57

 

	
  QI Standard per BSC

  	
   

  	
  Activities
  Performed by Group

  	
   

  	
  Group
  Reporting

  Frequency to BSC

  	
   

  	
  BSC
  Oversight

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

  •                  Wait times

  •                  Appointments

  •                  After-hours care

  •                  After-hours care

  •                  Telephone access;

  •                  Access for referrals to specialty care

  •                  Development of access study design,
  methodology and tools

  	
   

  	
  •                  Participate in BSC’s access surveys.

  •                  Schedule member appointments based on access
  guidelines.

  •                  Perform internal IPA/MG access study.

  	
   

  	
  •                  Quarterly access study results as performed
  by IPA/MG

  	
   

  	
  •                  Access Study Data results

  •                  Review Group’s Access Guidelines

  •                  Review of access-related patient complaints

  •                  Trend reports of member complaints re:
  access

  
	
  6.  Member Satisfaction

  	
   

  	
  Participate in Group’s Member Satisfaction Surveys.

  	
   

  	
  Quarterly

  	
   

  	
  •                  Review of member complaint data.

  •                   Review of member survey data.

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

  
	
  7.  Health Management

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

  	
   

  	
  •                  Data collection

  •                  Program Implementation as provided by BSC

  •                  Provider & staff education as provided
  by BSC

  	
   

  	
  •                  Annual submission of program design.

  •                  Annual submission of BSC member
  participation list.

  	
   

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

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

  •                  Verification with individual providers of
  participation in the chronic care initiatives.

  
	
  8.  Clinical Practice Guidelines

  •                  acute and chronic services.

  	
   

  	
  •                  Adopts BSC guidelines

  •                  Disseminates guidelines to providers.

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

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

  	
   

  	
  •                  Annual submission of guidelines.

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

  	
   

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

  •                  BSC to review and approve all guidelines.

  

 

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

 

58

 

	
  QI Standard per BSC

  	
   

  	
  Activities Performed by Group

  	
   

  	
  Group Reporting

  Frequency to BSC

  	
   

  	
  BSC Oversight

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

  	
   

  	
  •                  Adopts BSC guidelines.

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

  	
   

  	
  •                  Annual submission of guidelines.

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

  	
   

  	
  •

  
	
  10.  Clinical Measurement

  Activities:

   

  •                  Data
  collection

  •                  Measurement

  •                  Data analysis

  •                  Intervention & Implementation

   

  Related to:

  •                  Primary care services

  •                  High-volume specialty
  services

  •                  Behavioral Health services

  •                  Institutional services

  •                  Over/under utilization monitoring

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

  	
   

  	
  •                  Identify Group key clinical areas for study development

  •                  Data collection

  •                  Data analysis

  •                  Recommend and
  develop interventions

  	
   

  	
  •                  Prior to study implementation

  •                  On-going reports during implementation of
  study 

  •                  Clinical activity

  findings reported no less than quarterly

  	
   

  	
  •                  Prospective review and approval of clinical measurement activities

  •                  Quarterly review of monitoring activity
  results

  
	
  11.  Intervention & follow-up

  for clinical issues

  	
   

  	
  •                  Implementation of action plan to immediate
  care and service.

  •                  Evaluate affects of actions taken.

  	
   

  	
  •                  Prior to study implementation.

  •                  On-going reports during implementationof study.

  •                  Clinical
  activity findings reported no less
  than quarterly

  	
   

  	
  •                  Prospective review and approval of clinical
  measurement activities

  •                  Quarterly review of monitoring activity
  results

  
	
  12.  Effectiveness of QI

  Program and Demonstration of Required Improvements

  	
   

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

  	
   

  	
  •                  Annual QI program eval.

  •                  QI meeting minutes

  •                  QI quarterly reporting on activities listed
  in QI Plan

  	
   

  	
  •                  Submission of QI annual evaluation.

  

 

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

 

59

 

	
  QI Standard per BSC

  	
   

  	
  Activities Performed by Group

  	
   

  	
  Group Reporting

  Frequency to BSC

  	
   

  	
  BSC Oversight

  
	
  13.  Grievance process/ Complaint handling
  & reporting

  	
   

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

  	
   

  	
   

  	
   

  	
  •                  Annual review of Group’s complaint policies
  & procedures 

  •                  Quarterly review of complaint log

  
	
  14.  QI oversight

  	
   

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

  	
   

  	
   

  	
   

  	
  •                  Pre-delegation on-site audit

  •                  Annual on-site audit

  •                  Committee meeting minutes

  •                  On-going review of Group delegation
  activities.

  

 

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

 

60

 

ATTACHMENT II TO EXHIBIT F

 

BLUE
SHIELD OF CALIFORNIA

UTILIZATION
MANAGEMENT (UM) REQUIREMENTS

 

	
  UM Standard per BSC

  	
   

  	
  Activities Delegated to Group

  	
   

  	
  Group

  Reporting

  Frequency to

  BSC

  	
   

  	
  BSC Oversight

  
	
  1.          UM
  program Structure & Process: 

  •                    Programs

  •                    Work
  Plan

  •                    Annual
  Eval.

  	
   

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

  	
   

  	
  Annual

  	
   

  	
  Review and
  submission, annually, of:

  •                  UM Program

  •                  UM Work plan

  •                  UM Annual
  Eval.

  
	
  2.          Prior-authorization

  	
   

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

  	
   

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

  	
   

  	
  •             Retro-review of
  referrals

  •             Inter-Rater
  Reliability Studies

  •             Authorization and
  Denials

  •             Review trends in QI
  reporting and patient complaints

  
	
  3.          Concurrent
  review

  	
   

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

  	
   

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

  	
   

  	
  •             Retro-review of
  concurrent review decisions

  •             Bed day report

  •             Review trends in QI
  reporting and patient complaints

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

  	
   

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

  	
   

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

  	
   

  	
  •             Retro-review of
  case management files

  •             Review trends in QI
  reporting and patient complaints

  
	
  5.          Discharge
  Planning

  	
   

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

  	
   

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

  	
   

  	
  •             Retro-review of
  discharge planning cases

  •             Review trends in QI
  reporting and patient complaints

  
	
  6.          DME

  	
   

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

  	
   

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

  	
   

  	
  •             Retro-review of DME
  authorization and denials

  •             Review trends in QI
  reporting and patient complaints

  
	
  7.          Home
  Health

  	
   

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

  	
   

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

  	
   

  	
  •             Retro-review of
  home health authorization and denials

  •             Review trends in QI
  reporting and patient complaints

  
	
  8.          Institutional
  Reporting

  	
   

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

  	
   

  	
  Monthly to BSC.

  	
   

  	
  Assure
  institutional report is sent to accountable Health Plan monthly

  

 

61

 

	
  UM Standard per BSC

  	
   

  	
  Activities Delegated to Group

  	
   

  	
  Group

  Reporting

  Frequency to

  BSC

  	
   

  	
  BSC Oversight

  
	
  9.          Decision Criteria

  •                  Medical appropriateness

  •                  LOS

  •             Catastrophic Case Management

  	
   

  	
  •                  Development of criteria.

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

  	
   

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

  	
   

  	
  •                  Annual review of evidence of adoption of
  criteria

  •                  Inter-rater reliability study

  •                  Bed day report

  •                  Catastrophic case report

  
	
  10.    Standards for UM Decision-making 

  •                  Pre-authorizations

  •                  Referrals

  •                  Expedited referrals

  •                  Denials for medical necessity

  •                  Retrospective review

  •                  Concurrent review

  	
   

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

  •                  Referrals management

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

  	
   

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

  	
   

  	
  •                  Review of denial letters for appropriate regulatory language and timeframes

  •                  Retro-review of authorizations/referrals/

  denials for medical necessity

  •                  Bed day report

  •                  Inter-rater reliability study.

  
	
  11.    OOA Patient Management

  	
   

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

  	
   

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

  	
   

  	
  •                  Bed day report

  
	
  12.    Technology Assessment

  	
   

  	
  Group is responsible to report and coordinate authorization requests
  for care that is considered experimental and/or investigational.  Group is responsible for the adherence to
  BSC P&Ps regarding the authorization of new technology and coordination
  of benefits interpretation.

  	
   

  	
  Concurrent

  	
   

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

  •                  Review of Appeals overturned

  
	
  13.    Continuity of Care

  	
   

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

  	
   

  	
   

  	
   

  	
  •                  Review and approval of submitted P&Ps

  •                  Annual review of utilization Management minutes of IPA/MG

  
	
  14.    Behavioral Health Management

  	
   

  	
  Day to day case management of BH cases is the responsibility of the
  group.  The group is further
  responsible for the coordination and continuity of care related to mental
  health care issues.

  	
   

  	
   

  	
   

  	
  •                  Review and approval of submitted P&Ps

  •                  Annual review of Utilization Management
  minutes of IPA/MG

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

  

 

62

 

	
  UM Standard per BSC

  	
   

  	
  Activities Delegated to Group

  	
   

  	
  Group

  Reporting

  Frequency to

  BSC

  	
   

  	
  BSC Oversight

  
	
  15. Benefit Development Interpretation

  	
   

  	
  Compliance with benefit interpretation as provided by BSC.

  	
   

  	
  Concurrent submission of ALL denials.

  	
   

  	
  Concurrent review of denials.

  
	
  16.    Oversight of Delegated UM activities

  	
   

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

  	
   

  	
  At least quarterly.

  	
   

  	
  Quarterly audits

  

 

63

 

ATTACHMENT
III TO EXHIBIT F

 

BLUE
SHIELD OF CALIFORNIA

CREDENTIALING/DELEGATION REQUIREMENTS

 

	
  Standard per BSC

  	
   

  	
  Delegateable

  Status

  	
   

  	
  Activities Delegated to Group

  	
   

  	
  Group

  Reporting

  Frequency to

  BSC

  	
   

  	
  BSC Oversight

  
	
  1.               Credentialing structure &

  process:

  •                  Policies & procedures

  •                  Committee/Review body

  	
   

  	
  Non-delegateable establishment of standards

  	
   

  	
  Development & implementation of relevant policies and procedures:

  •                  Scope

  •                  Criteria

  •                  Decision-making

  •                  Committee/review body

  •                  Protection of provider rights

  •                  Medical Director or designee’s
  responsibilities

  •                  Peer Review/Disciplinary Action

  •                  Documentation of Agreement

  •                  Initial evaluation

  •                  Oversight
  organization retains right of approval/disapproval

  	
   

  	
  Annual

  	
   

  	
  Review of annual submission of:

  •                  Policies and

  Procedures

  
	
  2.               Appointment process

  	
   

  	
  Non-delegateable
  establishment of standards

  	
   

  	
  •                  Completion of application

  •                  Primary source verification

  •                  Verification of information from
  monitoring organizations

  •                  Identification of sanction activity

  	
   

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

  	
   

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

  
	
  3.               Reappointment process

  	
   

  	
  Non-delegateable
  establishment of standards

  	
   

  	
  •                  Primary source verification

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

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

  •                  Reappointment is performed at least every
  two years.

  	
   

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

  	
   

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

  

 

64

 

	
  Standard per BSC

  	
   

  	
  Delegateable

  Status

  	
   

  	
  Activities Delegated to Group

  	
   

  	
  Group

  Reporting

  Frequency to

  BSC

  	
   

  	
  BSC Oversight

  
	
  4.               Office Site Visits

  	
   

  	
  Non-delegateable establishment of standards

  	
   

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

  •                  At the time of recredentialing, an
  office site visit for high volume PCP’s which includes

  •                  Evaluation of medical record
  keeping practices

  	
   

  	
  N/A

  	
   

  	
  BSC performs at least annual review of:

  •                  Policies & procedures describing office
  site visits

  Initial and re-appointment files to assess evidence of office site visits

  
	
  5.               Credentialing file
maintenance

  	
   

  	
  Non-delegateable establishment of standards

  	
   

  	
  •                  Maintenance of individual provider
  credentialing/ recredentialing files.

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

  	
   

  	
  As requested for governmental, accreditation and regulatory
  review.

  	
   

  	
  BSC performs at least annual review of:

  •                  Policies & procedures describing
  submission of files upon request of BSC for the purposes of meeting
  governmental, accrediting and regulatory agency review requests.

  BSC requests for copy of credentialing/ recredentialing file for
  review by governmental, accrediting and regulatory agency review will be
  within the required time frame of requesting agency.

  

 

65

 

ATTACHMENT IV TO EXHIBIT F

 

BLUE
SHIELD OF CALIFORNIA

CLAIMS
PROCESSING REQUIREMENTS

 

	
  Standard per BSC

  	
   

  	
  Activities Delegated to Group

  	
   

  	
  Group Reporting

  Frequency to BSC

  	
   

  	
  BSC Oversight

  
	
  1.  Payment

  •                  Timeliness

  •                  Payment Accuracy

  •                  Denials

  	
   

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

  	
   

  	
  Monthly

  	
   

  	
  Monthly report
  review. Periodic audits

  
	
  2.  Claims
  Forwarding

  	
   

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

  	
   

  	
  None

  	
   

  	
  As required.

  
	
  3. 
  Self-Monitoring and Reporting

  	
   

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

  	
   

  	
  Monthly

  	
   

  	
  Monthly report
  review. Periodic audits.

  
	
  4.  Sub-delegation of claims processing
  through capitation.

  (This does not
  refer to a TPA or management company arrangement for Group’s entire claims
  processing.)

  	
   

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

  	
   

  	
  Monthly
  including breakout of sub-capitated entities.

  	
   

  	
  Periodic audits

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

  	
   

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

  	
   

  	
  As requested

  	
   

  	
  Periodic audits

  Random focused
  audits Focused reviews

  

 

66

 

Exhibit G-l

 

HMO
IPA/Medical Group Agreement

 

BLUE
SHIELD 65 Plus PROVISIONS

 

PROFESSIONAL
CARE IPA MEDICAL GROUP

 

Effective
Date:                  NA

 

Group and Group Physicians specifically
agree to serve Blue Shield 65 Plus Members pursuant to the terms and conditions
of this Agreement and the following requirements:

 

1.                                       This
Agreement shall apply to Blue Shield 65 Plus Members who are enrolled in Blue
Shield’s Medicare+ Choice Plan.

 

2.                                       DEFINITIONS—The following definitions shall apply
for Blue Shield 65 Plus Members in addition to the Definitions set forth in
Article I of the Agreement:

 

A.                         “Emergency
Medical Condition”  shall mean a
medical condition manifesting itself by acute symptoms of sufficient severity
(including severe pain) such that a prudent layperson, with an average
knowledge of health and medicine, could reasonably expect the absence of
immediate medical attention to result in (1) serious jeopardy to the health of
the individual or, in the case of a pregnant woman, the health of the woman or
her unborn child; or (2) serious impairment to bodily functions; or (3) serious
dysfunction of any bodily organ or part.

 

B.                           “Emergency
Services” shall mean those medical and hospital services required that are
(i) furnished by a Physician qualified to furnish emergency services; and (ii)
needed to evaluate or stabilize an Emergency Medical Condition.

 

C.                                     “Member”
shall mean a Medicare beneficiary who is enrolled in the Health Plan’s
Medicare+Choice program (“Blue Shield 65 Plus Choice Plan”) who is assigned to
a Group Physician and Hospital.

 

D.                                    “Urgently
Needed Services” will mean medical services received outside of the Service
Area which are, in the judgment of a prudent layperson, required without delay
in order to prevent serious deterioration of Enrollee’s health as a result of
an illness or injury.

 

3.                                  OBLIGATIONS OF GROUP—The Obligation set forth in
Article II. Paragraph 2.6 of the Agreement is modified to add the following at
the end of current text of Paragraph 2.6 and shall apply to Blue Shield 65 Plus
Members:

 

67

 

“Group will comply and have its Group
Providers comply with state and federal laws and regulations including but not
limited to physician incentives, and stop loss insurance requirements.  Group shall include in its contracts with
Group Providers all provisions required by federal and state laws, including
the BBA and related regulations.  Group
shall ensure that, on or before December 31, 1999, all contracts with Group
Providers comply with all applicable Medicare+Choice regulations as described
in this Exhibit H. and as outlined in the Provider Manual.  Further, to the extent Group subcapitates
other provider organizations and the contracts with such organizations delegate
to the organization responsibility for claims processing, including the right
to pay or deny claims, Group’s contracts with such Group Providers shall
require that they comply with the provisions of this Exhibit G-l.  Further, Group shall comply with the
provisions set forth in Exhibit F of this Agreement and in the Provider
Manual.”

 

The Obligation set forth in Article II.
Paragraph 2.12 of the Agreement is modified to add the following at the end of
the current text of Paragraph 2.12 and shall apply to Blue Shield 65 Plus
Members:

 

“Submission of Electronic Encounter
Data.  Group agrees to furnish Blue
Shield with complete encounter data for Capitated Professional Services
rendered to Members in the HCFA 1500 format. 
The encounter data will be furnished to Blue Shield through Electronic
Data Interchange and shall be received by Blue Shield ninety (90) days
following the date of service.  Group
also agrees to furnish medical records that may be required to obtain any
additional information or corroborate the encounter data.  Group further agrees to have its CEO attest
and certify the completeness and truthfulness of the encounter data
submitted.  Failure by Blue Shield to
receive encounter data within stipulated time frame will result in Group
receiving reduced compensation as described in Paragraph 7.11 of this Agreement
as well as grounds for termination of this Agreement.”

 

4.                                       COMPLIANCE WITH LEGAL REQUIREMENTS—In
addition to the requirements set forth in Article XIII. of the Agreement, the
following new Paragraphs shall also apply:

 

“13.7         Provider
Terminations.  If Blue Shield
terminates a Group Provider without cause, Blue Shield must provide Group at
least sixty (60) days notice.  If Group
terminates a Group Provider without cause, Group must provide Blue Shield at
least sixty (60) days notice.

 

“13.8         Medicare+Choice.  Group will comply and have its Group
Providers comply with state and federal laws and regulations including but not
limited to physician incentives, and stop loss insurance requirements.  Group shall submit to Blue Shield on an
annual basis descriptive information regarding its Physician Incentive Plan
(PIP) as required by CMS.  Group shall
submit such information utilizing the CMS PIP Disclosure Forms.  Group shall include in its contracts with

 

68

 

Group Providers all provisions required
by federal and state laws, including the BBA and related regulations.  Group shall ensure that, on or before
December 31, 1999, all contracts with Group Providers comply with all
applicable Medicare+Choice regulations as described in this Amendment and as
outlined in the Provider Manual.

 

Group understands that payments made by
Blue Shield are, in whole or in part, derived from federal funds, and therefore
provider and its subcontractors are subject to certain laws that are applicable
to individuals and entities receiving federal funds.  Group agrees to comply with all applicable Medicare laws,
regulations and CMS instructions including Title VI of the Civil Rights Act of
1964, Section 504 of the Rehabilitation Act of 1973, the Age Discrimination Act
of 1975, the Americans with Disabilities Act, and to require their
subcontractors to do the same.  Group
agrees to include the requirements of this section in its contracts or
subcontracts with other Participating Providers or entities.

 

In making payments to Group Physicians
and other Group Providers for Covered Services, Group shall comply with the
timeliness requirements set forth in applicable federal law, including, but not
limited to, any applicable CMS rules and regulations.

 

13.9               CMS
Participation Requirements. Group is prohibited from employing or
contracting with an individual who is excluded from participation in Medicare
for the provision of any of the following: 
healthcare services, utilization review services, medical social work
services and administrative services. 
In the event Group fails to comply with the above, Blue Shield reserves
the right to pass through to the Group any sanctions imposed by CMS for
violation of this prohibition.

 

13.10         Organization
Determination Process. 
Blue Shield may delegate the process of utilization management to the
Group.  If such delegation occurs, Group
shall comply with Medicare regulations and CMS instructions pertaining to
timely organization determinations by Group as to whether to provide, deny,
reduce or discontinue a Covered Service to a Member.  Such determinations shall be made in accordance with procedures
and instructions set forth in the Provider Manual.  Group shall submit to Blue Shield on a monthly basis a report
which tracks the requests for organization determinations and expedited reviews
and the timeframe within which decisions were made by Group.  This section is subject to change as
determined by CMS regulations, policies and instructions.

 

13.11         Private
Contract.  Group understands
that Blue Shield is prohibited by CMS from paying capitation to, or including
in its network, any provider that has entered into a private contract with a
Member for the provision of services. 
Blue Shield reserves the right to terminate any such provider from its
network.  Further, if the provider so
terminated was a Group Physician, Blue Shield shall have the right to reduce
Group’s capitation by the amount of any capitation that was paid either
directly or indirectly to such provider(s). 
This provision shall remain in

 

69

 

effective for a period of two (2) years
from the time that all direct contracts between provider and Member have been
terminated.

 

13.12        Health Assessment.  Blue Shield must conduct a health assessment
of all Members within ninety (90) days of the effective date of Member’s
enrollment with Blue Shield.  Group
agrees to cooperate in such health assessment process.

 

13.13        Utilization Management Plan.  Prior to the execution of this Agreement,
and if utilization management functions are delegated to Group by Blue Shield,
Group will provide Blue Shield with a written Utilization Management Plan for
the purpose of review and approval by Blue Shield.  Group shall notify Blue Shield within thirty (30) days of any
changes involving the rules, regulations, authorities and responsibilities for
the Utilization Management Plan, which shall be subject to reasonable approval
thereof by Blue Shield.  The Utilization
Management Plan shall include procedures approved by Blue Shield to identify,
assess, establish, and implement a treatment plan for Members who have complex
or serious medical conditions, and for direct access of Members to services as
mandated by the BBA and related regulations. 
Group agrees to comply with Blue Shield’s Medical Policies.  All Group denial letters shall be reviewed
and approved by Blue Shield.  Group
agrees to cooperate with Blue Shield in furnishing the required reports identified
in the Provider Manual.”

 

5.                                       PLAN QUALITY IMPROVEMENT—Following
Paragraph 2.7 of the Agreement, the following provisions shall also apply.

 

“Blue Shield retains responsibility for
Quality Improvement and Quality Management Programs.  Quality Improvement and Quality Management Programs are not
delegated to Group.  Group however
agrees to comply with Blue Shield’s Quality Improvement Program for both
hospital and office based care.  Blue
Shield’s Quality Improvement Program shall be developed in consultation with
Blue Shield Providers to ensure that practice guidelines of quality improvement
and quality management pursuant to Medicare regulations and CMS instructions
are met.  Group agrees to maintain a
Quality Management Program which states that Group will review on a
prospective, concurrent and retrospective basis the quality, appropriateness,
level of care and utilization of Group Providers.  The Quality Management Program will include among others an
annual evaluation, annual quality management goals, proposed quality management
studies, a description of the quality management committee and frequency of
meetings.  Group shall notify Blue
Shield of any changes to the Quality Management Plan which shall be subject to
prior approval by Blue Shield.”

 

6.                                  PROVIDER MANUAL—In
Article V. of the Agreement, the following provisions shall be added to the end
of Paragraph 5.2:

 

Precedence.  The Provider Manual and all revisions
thereto shall be consistent with the laws and regulations governing the
Medicare+Choice program, the

 

70

 

regulations established by CMS, the
Knox-Keene Act and the provisions of this Agreement.  In the event of any conflict or inconsistency between the
Provider Manual, the Agreement, and/or any of the cited state or federal laws
and regulations, the provision which governs shall be determined by apply the
following order of precedence: the BBA, CMS regulations and instructions, the
Knox-Keene Act and regulations, the Agreement and, then, the Provider Manual.

 

71

 

Exhibit G - 2

 

HMO IPA/Medical
Group Agreement

 

BLUE SHIELD POS
PROVISIONS

 

PROFESSIONAL
CARE IPA MEDICAL GROUP

 

Effective Date:
JANUARY 1, 2003

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

2.                                       Financial
Responsibility.  The Capitation
payable to Group pursuant to Exhibit C shall cover, and Group shall be
financially responsible for:  (i) all
BSC POS Professional Services which are In-Network Services; and, (ii) all
Out-of-Network BSC POS Professional Services provided by Group Providers.  Except as otherwise provided herein, Blue
Shield shall be financially responsible for Out-of-Network BSC POS Professional
Services provided by providers who are not Group Providers.  Those BSC POS Professional Services which
are Blue Shield’s financial responsibility hereunder will be included in the
POS Out-of-Network Professional Fund settlement described in Paragraph 8 of
this Exhibit G-2.  Those BSC POS

 

72

 

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

 

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

 

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

 

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

 

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

 

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

 

73

 

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

 

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

 

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

 

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

 

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

 

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

 

74

 

a.               Funding:  For BSC POS Members Blue Shield will
allocate to a POS In-Network Shared Savings Fund a per Member per month amount
set forth in Schedule 1 to this Exhibit G-2 for all Members assigned to Group,
subject to retroactive adjustments either upward or downward due to retroactive
changes in membership.  See Section 6.3 Eligibility
List and Modifications.

 

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

 

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

 

d.              If the
total actual cost of Shared Savings services is less than the total allocation
to the POS In-Network Shared Savings Fund, then Group shall be entitled to
fifty percent (50%) of the amount by which the allocation exceeds the costs,
minus any carry forward resulting from deficits from previous Agreement years.

 

e.               If the
total actual cost of Shared Savings services is more than the total allocation
to the POS In-Network Shared Savings Fund, then fifty percent (50%) of the
amount by which the actual costs exceed the total allocation, not to exceed
five percent (5%) of POS Capitation, shall be allocated to Group and shall be
handled as follows: (i) the excess may be deducted from any other settlements
or payments, except Capitation and Professional Stop Loss Program payments made
pursuant to Exhibit H, due to Group from Blue Shield, and, (ii) any remaining
amounts shall be carried forward into future Agreement Years and shall be
deducted from any Shared Savings payments to Group in future years.  Upon, non-renewal or termination, such
deficits shall not be collected by Blue Shield from Group.

 

75

 

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

 

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

 

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

 

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

 

d.              Out-of-Network
Professional Fund Surplus – For any Agreement Year in which the
POS Out-of-Network Professional Budget exceeds the POS Out-of-Network
Professional Expenses, IPA shall be entitled to *** of the POS Out-of-Network
Professional Fund surplus, minus any POS Out-of-Network Professional Fund or
POS Out-of-Network Institutional Fund deficit carried forward from a previous
Agreement Year.

 

e.               Out-of-Network
Professional Fund Deficit – For any Agreement Year in which the
POS Out-of-Network Professional Expenses exceed the POS Out-of-Network
Professional Budget, then *** of  the
amount by which the actual costs exceed the total allocation, not to exceed ***
of POS Capitation, shall be allocated to the Group and shall be handled as follows:
(I) the exceed shall be offset against any Out-Of-Network Institutional
surplus, and, (ii) any remaining amounts shall be carried forward into future
Agreement Years and shall be offset against any Out-of-Network Professional or
Institutional Fund Surpluses in future years. 
In the event the Deficit carried forward exceeds the Surplus in a future
year, the remaining deficit shall continue to be carried forward and offset
against any Surpluses in subsequent years. 
Upon non-renewal or termination, such deficits shall not be collected by
Blue Shield from Group.

 

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

 

76

 

a.               Funding
of Out-of-Network Institutional Fund - Blue Shield will allocate on
a monthly basis the amounts set forth in Schedule 1 to this Exhibit H-2 for all
BSC POS Members assigned to Group, subject to retroactive adjustments due to
retroactive changes in members (the “POS Out-of-Network Institutional
Budget”).  See Section 6.3.

 

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

 

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

 

d.              Out-of-Network
Institutional Fund Surplus – For any Agreement Year in which the
POS Out-of-Network Institutional Budget exceeds the POS Out-of-Network
Institutional Expenses, IPA shall be entitled to *** of the POS Out-of-Network
Institutional Fund surplus minus any POS Out-of-Network Professional Fund or
POS Out-of-Network Institutional Fund deficit carried forward from a previous
Agreement year.

 

e.               Out-of-Network
Institutional Fund Deficit – For any Agreement Year in which the
POS Out-of-Network Institutional Expenses exceed the POS Out-of-Network
Institutional Budget, then *** of the amount by which the actual costs exceed
the total allocation, not to exceed *** of POS Capitation, shall be allocated
to Group and shall be handled as follows: (I) the excess may be offset against
any Out-Of-Network Professional surplus, and, (ii) any remaining amounts shall
be carried forward and offset against future Agreement Years Out-of-Network
Professional or Institutional Fund Surpluses. 
In the event the Deficit carried forward exceeds the Surplus in a future
year, the remaining deficit shall continue to be carried forward and offset
against any Surpluses in subsequent years. 
Upon non-renewal or termination, such deficits shall not be collected by
Blue Shield from Group.

 

***

 

77

 

Exhibit G-2, Schedule 1

 

HMO IPA/Medical
Group Agreement

POS Fund
Allocations for Professional Care IPA - 385U9

Effective Date:
01/01/2003

 

as of 01/01/2003, the
effective net yield (which includes the deduction for Stop Loss, if applicable)
for the following PMPMs are $29.91 for the POS In-network Shared Saving, $15.45
for POS Out-of-network Professional, and $12.82 for the POS Out-of-network
Institutional, based on the 08/01/2002 membership.

 

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

 

Members Other Than
Blue Shield 65 Plus Members

 

	
  Age &
  Sex Categories and POS Fund Allocations

  	
   

  
	
  Category

  	
   

  	
  POS Fund
  Allocation (PMPM)

  	
   

  
	
  Sex

  	
   

  	
  Age

  	
   

  	
  IN-NETWORK

  SHARED SAVINGS

  	
   

  	
  OUT-OF-NETWORK

  PROFESSIONAL

  	
   

  	
  OUT-OF-NETWORK

  INSTITUTIONAL

  	
   

  
	
  F

  	
   

  	
  0 - 1

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  F

  	
   

  	
  2 - 6

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  F

  	
   

  	
  7 - 18

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  F

  	
   

  	
  19 - 21

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  F

  	
   

  	
  22 - 24

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  F

  	
   

  	
  25 - 29

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  F

  	
   

  	
  30 - 34

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  F

  	
   

  	
  35 - 39

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  F

  	
   

  	
  40 - 44

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  F

  	
   

  	
  45 - 49

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  F

  	
   

  	
  50 - 54

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  F

  	
   

  	
  55 - 59

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  F

  	
   

  	
  60 - 64

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  F

  	
   

  	
  65 + (NM)

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  F

  	
   

  	
  65 + (M)*

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  M

  	
   

  	
  0 - 1

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  M

  	
   

  	
  2 - 6

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  M

  	
   

  	
  7 - 18

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  M

  	
   

  	
  19 - 21

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  M

  	
   

  	
  22 - 24

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  M

  	
   

  	
  25 - 29

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  M

  	
   

  	
  30 - 34

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  M

  	
   

  	
  35 - 39

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  M

  	
   

  	
  40 - 44

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  M

  	
   

  	
  45 - 49

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  M

  	
   

  	
  50 - 54

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  M

  	
   

  	
  55 - 59

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  M

  	
   

  	
  60 - 64

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  M

  	
   

  	
  65 + (NM)

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  M

  	
   

  	
  65 + (M)*

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  

 

* = Medicare Primary

 

78

 

Exhibit H

 

HMO
IPA/Medical Group Agreement

 

PROFESSIONAL
STOP LOSS PROGRAM

 

PROFESSIONAL
CARE IPA MEDICAL GROUP

 

Effective
Date:  NA

 

A.                                   Commencement
of Stop Loss Program:

 

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

 

	
   

  	
  The
  Effective Date of the Agreement

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  OR,

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  [Specify Date]

  	
   

  	
  , 19

  

 

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

 

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

 

B.                                     Termination
or Modification of Stop Loss Program:

 

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

 

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

 

79

 

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

 

C.                                     Stop
Loss Program:

 

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

 

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

 

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

 

(ii)                                  Allowable
Costs (both for determining the Attachment Level and Stop Loss
Program reimbursement after the Attachment Level is reached) are the lesser of
the amount actually paid (other than capitation payments) by Group for such
Capitated Professional Services, or one-hundred percent (100%) of the Blue
Shield’s PPO Physician Allowances in effect at the time.  Allowable Costs are reduced by: (a) the
Member’s applicable Copayments; and (b) any amount for which Group is entitled
to reimbursement or payment from any other source.

 

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

 

80

 

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

 

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

 

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

 

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

 

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

 

D.                                    Stop
Loss Program Charges to Group:

 

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

 

	
  Commercial

  	
   

  	
  NA

  
	
  Point
  of Service (POS)

  	
   

  	
  NA

  
	
  Blue
  Shield 65 Plus

  	
   

  	
  NA

  

 

***

 

81

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