Document:

Exhibit
10.131

 

AMENDMENT TO

CALIFORNIACARE MEDICAL SERVICES AGREEMENT

BETWEEN

BLUE CROSS OF CALIFORNIA

AND

PROSPECT MEDICAL GROUP

 

This Amendment to the CaliforniaCare Medical Services Agreement is
entered into at Woodland Hills, Los Angeles County, California, and will be
effective as of January 1, 2001 between Blue Cross of California and its
Affiliates (“BLUE CROSS”) and Prospect Medical Group (“PARTICIPATING MEDICAL
GROUP”).

 

RECITALS

 

A.           BLUE
CROSS and PARTICIPATING MEDICAL GROUP have previously entered into a
CaliforniaCare Medical Services Agreement, effective January 1, 1997, as
may have been amended (“Agreement”).

 

B.             The
parties now desire to amend the Agreement.

 

NOW, THEREFORE, IT IS AGREED:

 

1.               All
references in the Agreement to the Department of Corporations and the
Commissioner of Corporations shall hereafter mean the California Department of
Managed Health Care and the Director of the California Department of Managed
Health Care, respectively.

 

2.               The
following Sections 2.09.1 and 2.37.1 are hereby added to Article II of the
Agreement:

 

2.09.1                  “BLUE CROSS Services” means all
CALIFORNIACARE Covered Medical Services which are designated in this Agreement
or in the Division of Financial Responsibility as BLUE CROSS Services.

 

2.37.1                  “Mental Health Parity Services” means
those mental health services related to the diagnosis and Medically Necessary
treatment of “severe mental illnesses” and “serious emotional disturbances of a
child,” as such terms are defined in Section 1374.72
of the California Health and Safety Code.

 

3.               Section 2.23
of the Agreement is hereby deleted in its entirety and replaced with the
following:

 

“Emergency” means a sudden onset of a medical condition manifesting
itself by acute symptoms of sufficient severity (including, without limitation,
sudden and unexpected severe pain) such that the patient may reasonably believe
that the absence of immediate medical or psychiatric attention could reasonably
result in any of the following:

 

A.           Placing
the patient’s health in serious jeopardy,

 

B.             Serious
impairment to bodily functions,

 

C.             Other
serious medical or psychiatric consequences, or

 

D.            Serious
and/or permanent dysfunction of any bodily organ or part.

 

 

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

 

1

 

4.               Section 2.42 of the Agreement is hereby
deleted and replaced with the following:

 

“Operations Manual” means the CaliforniaCare PMG Operations Manual, as
found on BLUE CROSS’ Internet web site at www.bluecrossca.com.

 

5.               Section 4.05C
of the Agreement is hereby amended and replaced in its entirety with the
following:

 

PARTICIPATING MEDICAL GROUP shall:

 

(1)          Make available to BLUE CROSS all minutes and notes from any and all Utilization
Management Committees and/or activities which relate to Members.

(2)          Make available to BLUE CROSS upon request all composite Utilization
Management data which include Members in the composite data set and provide
such detail as is available regarding those Members.

(3)          Provide the BLUE CROSS Medical Director (or the Medical Director’s
clinical designee) with a schedule designating the time and place of all
Utilization Management Committee meetings that relate to Members, in order that
he or she shall, in the Medical Director’s discretion, attend.  The BLUE CROSS Medical Director shall notify
PARTICIPATING MEDICAL GROUP in advance of his or her attendance and shall not
be excluded from any deliberation on activities related to Members.

(4)          Comply with all applicable laws and regulations concerning utilization
management criteria and processes, including, without limitation, California Health and Safety Code Sections 1363.5 and
1367.01.

 

6.               Section 4.06
of the Agreement is hereby amended to add the following sentence to the
beginning of such Section:

 

PARTICIPATING MEDICAL GROUP agrees to provide financial information to
BLUE CROSS or its designated agent and to meet any other financial requirements
that assist BLUE CROSS in maintaining the financial viability of its
arrangements for the provision of health care services in the manner described
in Section 1375.4 of the California
Health and Safety Code and applicable regulations.

 

7.               Section 4.10A
of the Agreement is hereby deleted in its entirety and replaced with the
following:

 

To accept any and all Members who select PARTICIPATING MEDICAL GROUP
until such time as PARTICIPATING MEDICAL GROUP shall have provided ninety (90)
days prior written notice to BLUE CROSS that it has reached its maximum capacity
as set forth in Section 16.08 herein, or that it anticipates reaching such
maximum within ninety (90) days from the date of the notice to BLUE CROSS.  The maximum capacity of PARTICIPATING
MEDICAL GROUP designated in Section 16.08 shall be reduced only upon
ninety (90) days written notice to BLUE CROSS provided that PARTICIPATING
MEDICAL GROUP demonstrates to BLUE CROSS’ reasonable satisfaction, that
PARTICIPATING MEDICAL GROUP is unable to provide, due to overcapacity, Covered
Medical Services to Members in accordance with BLUE CROSS guidelines as set
forth in the Operations Manual and Medical Policy Guidelines, and PARTICIPATING
MEDICAL GROUP has reached maximum capacity for all of its health maintenance
organization members.  The parties
acknowledge their understanding that enrollment from individual accounts, or
changes in selection of PARTICIPATING MEDICAL GROUP by Members, are not
entirely within the control of BLUE CROSS. 
Nothing in this Section shall require that BLUE CROSS reassign any
Members assigned to PARTICIPATING MEDICAL GROUP as of the effective date of the
ninety (90) day notice referenced herein.

 

2

 

8.               Section 4.10E
of the Agreement is hereby amended to add the following paragraph to the beginning
of such Section:

 

BLUE CROSS will comply with all requirements of California Health and Safety Code Section 1395.6.  The BLUE CROSS Managed Care Network may be
sold, leased, transferred or conveyed to Other Payors, which may include
workers’ compensation insurers or automobile insurers.  BLUE CROSS will disclose upon initial
signing of this Agreement and within 30 days of receipt of a written request
from PARTICIPATING MEDICAL GROUP a summary of all Other Payors currently
eligible to pay the negotiated rates under this Agreement as a result of their
arrangement with BLUE CROSS.  BLUE CROSS
requires such Other Payors to actively encourage Covered Persons to use network
participating providers when obtaining medical care through the use of one or
more of the following: reduced copayments, reduced deductibles, premium
discounts directly attributable to the use of a participating provider,
financial penalties directly attributable to the non-use of a participating
provider, providing Covered Persons with the names, addresses and phone numbers
of participating providers in advance of their selection of a health care
provider through the use of provider directories, toll-free telephone numbers
and internet web site addresses.  In the
event BLUE CROSS enters into an arrangement with an Other Payor that does not
require such active encouragement of the use of the BLUE CROSS Managed Care
Network, PARTICIPATING MEDICAL GROUP shall be allowed to decline to provide
services to such Other Payor.

 

9.               The
following Section 4.14 is hereby added to Article IV of the
Agreement:

 

4.14                           The parties agree that the
financial risk provisions of this Agreement have been negotiated and agreed to
by BLUE CROSS and PARTICIPATING MEDICAL GROUP.

 

10.         The following Sections 5.14.1 and 5.15.1 are hereby added to
Article V of the Agreement:

 

5.14.1                  To disclose information to PARTICIPATING
MEDICAL GROUP that enables PARTICIPATING MEDICAL GROUP to be informed regarding
the financial risk assumed under this Agreement, as required in California Health and Safety Code Section 1375.4
and applicable regulations.

 

5.15.1                  To authorize and arrange for the provision of
BLUE CROSS Services to Members for all new and renewing business.

 

11.         Section 7.01 shall be amended to read as follows:

 

Exhibits D, G, and G-1 (all incorporated by reference herein), set forth
Capitation payments for new and renewing business.  The applicable Capitation payment for each Member assigned to
PARTICIPATING MEDICAL GROUP, shall be paid monthly, prorated in accordance with
Member eligibility.

 

Such Capitation payment shall be adjusted for Member age, sex and
Benefit Agreement in accordance with age, sex and plan relativities that have
been developed by BLUE CROSS based upon actuarial assumptions and BLUE CROSS’
utilization experience.  BLUE CROSS
reserves the right to adjust such relativity factors, upon contract renewal,
based upon BLUE CROSS’ experience.

 

Effective January 1 2001, BLUE CROSS shall increase Capitation
rates in effect for 2000 for Durational Benefit Plans such as Plan “IC”
(“Individual Durational”) and Plan “L4” (“Small Group Durational”) for
PARTICIPATING MEDICAL GROUP by *** which rates shall remain in effect through
December 31, 2001.

 

Effective January 1 2002, BLUE CROSS shall increase Capitation
rates in effect for 2001 (excluding Durational Benefit Plans, AIM, CalKids, and
non-commercial products such as Workers’ Compensation, Medi-Cal and Medicare
Risk) for PARTICIPATING MEDICAL GROUP by *** which

 

3

 

rates shall remain in effect through December 31, 2002.  Effective January 1, 2002, BLUE CROSS
shall increase Capitation rates in effect for 2001 for Durational Benefit Plans
such as Plan “IC” (“Individual Durational”) and Plan “L4” (“Small Group Durational”)
for PARTICIPATING MEDICAL GROUP by *** which rates shall remain in effect
through December 31, 2002.

 

Effective January 1 2003, BLUE CROSS shall increase Capitation
rates in effect for 2002 (excluding Durational Benefit Plans, AIM, CalKids, and
non-commercial products such as Workers’ Compensation, Medi-Cal and Medicare
Risk) for PARTICIPATING MEDICAL GROUP by ***which rates shall remain in effect through December 31,
2003.  Effective January 1, 2003,
BLUE CROSS shall increase Capitation rates in effect for 2002 for Durational
Benefit Plans such as Plan “IC” (“Individual Durational”) and Plan “L4” (“Small
Group Durational”) for PARTICIPATING MEDICAL GROUP by *** which rates shall
remain in effect through December 31, 2003.

 

Effective January 1 2004, BLUE CROSS shall increase Capitation
rates in effect for 2003 (excluding Durational Benefit Plans, AIM, CalKids, and
non-commercial products such as Workers’ Compensation, Medi-Cal and Medicare
Risk) for PARTICIPATING MEDICAL GROUP *** which rates shall remain in effect
through December 31, 2004. 
Effective January 1, 2004, BLUE CROSS shall increase Capitation
rates in effect for 2003 for Durational Benefit Plans such as Plan “IC”
(“Individual Durational”) and Plan “L4” (“Small Group Durational”) for PARTICIPATING
MEDICAL GROUP by *** which rates shall remain in effect through
December 31, 2004.

 

12.         The second paragraph of Section 9,04 of the Agreement is hereby
deleted and replaced in its entirety with the following:

 

BLUE CROSS shall accrue Non-Capitated Expenses by each PARTICIPATING
MEDICAL GROUP by the calendar year the services were incurred and paid through
March 31st after year-end. 
Beginning in year two (2) of this Agreement, any claims received after
calculation of the final Non-Capitated Performance Settlement will be charged
to the following year’s Non-Capitated Expenses.  Any Non-Capitated Service admissions, including, but not limited
to, inpatient hospital, skilled nursing facility, hospice and alternative
birthing center admissions that occur in one calendar year and extend into the
next year shall accrue to the year the admission occurred.  Notwithstanding the aforementioned, any
claims for Non-Capitated Services or Shared Risk Services (as defined in the
CALIFORNIACARE Medical Services Agreement in effect for years prior to the
Initial Term of this Agreement) paid after the March 31st immediately
following the effective date hereof will be charged to the Non-Capitated
Expense for the first calendar year, or portion thereof, of this Agreement.

 

13.         The third paragraph of Section 9.06B of the Agreement is hereby
deleted and replaced in its entirety with the following:

 

Within one hundred eighty (180) days after the end of BLUE CROSS’ fiscal
year, BLUE CROSS shall pay the Non-Capitated Performance Settlement if a
Non-Capitated Performance Settlement amount is due to PARTICIPATING MEDICAL
GROUP.

 

14.         The second paragraph of Section 10.01 of the Agreement is hereby
deleted and replaced in its entirety with the following:

 

BLUE CROSS shall accrue OPDE for each PARTICIPATING MEDICAL GROUP by the
calendar year the services were incurred and paid through March 31st after
year-end.  Beginning in year two (2) of
this Agreement, any claims received after calculation of the final Outpatient
Prescription Drug Settlement will be charged to the following year’s OPDE.  Notwithstanding the aforementioned, any
claims for outpatient prescription drug services incurred prior to the Initial
Term of this Agreement paid after the March 31st immediately following the
effective date hereof and if applicable, for subsequent years, will be charged
to the OPDE for the first calendar year of this Agreement, or portion thereof.

 

4

 

15.         The second paragraph of
Section 10.03 of the Agreement is hereby deleted and replaced in its
entirety with the following:

 

The amount of the Outpatient Prescription
Drug Settlement and Formulary utilization incentive will be based on the
applicable PMPM Settlement calculation under Exhibit H multiplied by
PARTICIPATING MEDICAL GROUP’s Member Months for Members with outpatient
prescription drug benefits.  Within one
hundred eighty (180) days after the end of BLUE CROSS’ fiscal year, BLUE CROSS
will pay any Outpatient Prescription Drug Settlement that is due PARTICIPATING
MEDICAL GROUP for the previous year.

 

16.         Section 13.01 of the
Agreement is hereby deleted and replaced with the following

 

This Agreement shall be in effect for the
period January 1, 2001 through December 31, 2004.  Unless written notice of intent not to renew
or of intent to modify this Agreement is provided at least one hundred twenty
(120) days prior to December 31, 2004, this Agreement shall renew upon the
same terms and conditions for consecutive one year periods each year thereafter.

 

17.         Section II of
Exhibit A of the Agreement is hereby deleted in its entirety and replaced with
the following:

 

II.             Psychiatric Care
Benefits

 

Care shall be provided for (i) short-term
evaluation of the Member’s condition when such care is ordered by the attending
PARTICIPATING MEDICAL GROUP Physician and (ii) the diagnosis and medically
necessary treatment of “severe mental illnesses” and “serious emotional
disturbances of a child” as such terms are defined in California Health and Safety Code Section 1374.72.  Co-payments and limitations are as set forth
in the Member’s Benefit Agreement.  This
care shall not include visits for psychoanalysis.

 

18.         Exhibit A(l) of the
Agreement is hereby amended to delete in its entirety the categories of
“Chemical Dependency Rehabilitation,” “Detoxification” and “Mental Health
Services” and all provisions thereunder concerning financial responsibility for
the professional and facility components thereof and to replace them with the
following, respectively:

 

	
  List of Benefits/Services

  	
   

  	
  Capitation

  	
   

  	
  Non-

  Capitated

  	
   

  	
  BLUE

  CROSS

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  *CHEMICAL DEPENDENCY REHABILITATION

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Inpatient Facility Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Inpatient Professional Component

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Mental Health Services (Parity and
  Non-Parity)

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Non-Mental Health Services 

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Outpatient Facility Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Outpatient Professional Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  DETOXIFICATION

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Inpatient Facility Component 

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Professional Component

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Mental Health Services (Parity and
  Non-Parity) 

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Non-Mental Health Services

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  MENTAL HEALTH SERVICES (PARITY &
  NON-PARITY)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  * Inpatient Facility Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  * Inpatient Professional Component 

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  * Outpatient Professional Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  

 

5

 

19.         Exhibit F.  Exhibit F, Non-Capitated
Performance Settlement Schedule, of the Agreement is hereby deleted and
replaced in its entirety with Exhibit F(2), Non-Capitated Performance
Settlement Schedule, attached hereto and incorporated herein by this
reference.  All references in the
Agreement to Exhibit F shall hereafter refer to such Exhibit F(2).

 

20.         Exhibit G, Section 11, Paragraph C of the Agreement is deleted in
its entirety and is hereby replaced with the following:

 

PARTICIPATING MEDICAL GROUP may elect to receive advance Supplemental
Capitation Payments prior to the time PARTICIPATING MEDICAL GROUP’s In-Network
Utilization Factor is known, i.e., during the applicable calendar quarter.  However, if at the end of such calendar
quarter, PARTICIPATING MEDICAL GROUP’s In-Network Utilization Factor is below
0.42, then BLUE CROSS shall have the right to set off the amount of advance
Supplemental Capitation Payments made during such quarter from Capitation
payments due PARTICIPATING MEDICAL GROUP in subsequent months.

 

Notwithstanding the above, after any quarterly adjustments are computed
by BLUE CROSS, PARTICIPATING MEDICAL GROUP shall receive no less than sixty
percent (60%) of Capitation rates, regardless of the In-Network Utilization
Factor for PARTICIPATING MEDICAL.

 

21.         Exhibit H.  Exhibit H, Outpatient
Prescription Drug Settlement Schedule, of the Agreement is hereby deleted
and replaced in its entirety with Exhibit H(3), Outpatient Prescription Drug
Settlement Schedule, attached hereto and incorporated herein by this
reference.  All references in the
Agreement to Exhibit H shall hereafter refer to such Exhibit H(3).

 

Upon
acceptance of the parties, this Amendment, as of the date specified on page one
hereof, shall become a part of this Agreement, and all provisions of the
Agreement not specifically inconsistent herewith shall remain in full force and
effect.

 

	
  BLUE CROSS OF CALIFORNIA

  	
   

  	
  PARTICIPATING MEDICAL GROUP

  
	
   

  	
   

  	
   

  
	
  /s/ Barry Ford

  	
   

  	
  /s/ Peter G. Goll

  
	
  Signature

  	
   

  	
  Signature

  
	
   

  	
   

  	
   

  
	
  Barry Ford

  	
   

  	
  Peter G. Goll

  
	
  Print
  Name

  	
   

  	
  Print
  Name

  
	
   

  	
   

  	
   

  
	
  V.P. Network Services

  	
  3-30-01

  	
   

  	
  Senior
  Vice President

  	
  2/28/01

  
	
  Title

  	
  Date

  	
   

  	
  Title

  	
  Date

  

 

6

 

EXHIBIT F(2)

 

NON-CAPITATED PERFORMANCE SETTLEMENT SCHEDULE

For Non-Capitated Medical Services

For BLUE CROSS PLUS and CaliforniaCare

 

Based on Plan C,
$60,000 Stop Loss, Age/Sex Factor = 1.00 and Regional Factor = 1.00

 

Non-Capitated Performance
Settlement Calculation Method:

 

1)              Identify the
payment band that contains the PARTICIPATING MEDICAL GROUP’s Adjusted PMPM
Non-Capitated Expense.

2)              Subtract the
PARTICIPATING MEDICAL GROUP’s PMPM Non-Capitated Expense from the high value of
the payment band

3)              Multiply the result
from Step 2 by the multiplier column for the payment band

4)              Add the result from
Step 3 to the minimum payment amount for the payment band to get the PMPM
Non-Capitated Performance Settlement

5)              Multiply the PMPM
Non-Capitated Performance Settlement from Step 4 by the PARTICIPATING MEDICAL
GROUP’s Member Months to calculate the Non Capitated Performance Settlement

 

	
   

  	
   

  	
  Non-Capitated
  Expense Ranges

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (PMPM
  Non-Capitated Expense)

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Payment Bands

  	
   

  	
  Low

  	
   

  	
  High

  	
   

  	
  Multiplier

  	
   

  	
  Minimum
  Payment Amount

  	
   

  
	
  1

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  0

  	
  %

  	
  ***

  	
   

  
	
  2

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  25

  	
  %

  	
  ***

  	
   

  
	
  3

  	
   

  	
  ***

  	
   

  	
  ****

  	
   

  	
  40

  	
  %

  	
  ***

  	
   

  
	
  4

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  55

  	
  %

  	
  ***

  	
   

  
	
  5

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  65

  	
  %

  	
  ***

  	
   

  
	
  6

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  75

  	
  %

  	
  ***

  	
   

  
	
  7

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  65

  	
  %

  	
  ***

  	
   

  
	
  8

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  50

  	
  %

  	
  ***

  	
   

  
	
  9

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  40

  	
  %

  	
  ***

  	
   

  
	
  10

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  0

  	
  %

  	
  ***

  	
   

  

 

* Attachment Point

 

Example of Non-Capitated
Performance Settlement Calculation

 

Assume: PARTICIPATING MEDICAL
GROUP has an PMPM Non-Capitated Expense of ***; and there are 100,000 member
months

 

(1)                                  Identify the
payment band that contains the PARTICIPATING MEDICAL GROUP’s Adjusted PMPM
Non-Capitated Expense.

 

The PARTICIPATING MEDICAL
GROUP’s PMPM Non-Capitated Expense of *** falls between the low and high values
of payment band 7

 

(2)          Subtract the
PARTICIPATING MEDICAL GROUP’s PMPM Non-Capitated Expense from the high value
for the payment band.

***

 

(3)          Multiply the result
from Step 2 by the multiplier for the payment band.

***

 

(4)          Add the result from
Step 3 to the minimum payment amount for the payment band to get the PMPM
Non-Capitated Performance Settlement.  

*** PMPM Non-Capitated Performance Settlement

 

(5)          Multiply the PMPM
Non-Capitated Performance Settlement from Step 4 by the PARTICIPATING MEDICAL
GROUP’s Member Months to calculate the
Non-Capitated                 Performance
Settlement.

 

*** PMPM
Non-Capitated Performance Settlement x 100,000 member months = ***
Non-Capitated Performance Settlement

 

 

EXHIBIT H(3)

 

OUTPATIENT PRESCRIPTION DRUG SETTLEMENT SCHEDULE

 

PMPM Outpatient Prescription Drug Expense
Target:      $11.29 PMPM

 

	
  PMPM Expense Range

  	
   

  	
  Settlement
  Calculation

  	
   

  	
  PMPM
  Settlement Maximum

  	
   

  
	
  Greater than ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  *** to ***

  	
   

  	
  (*** - PMPM OPDE) x 45%

  	
   

  	
  ***

  	
   

  
	
  *** to ***

  	
   

  	
  (*** - PMPM OPDE) x 50%

  	
   

  	
  ***

  	
   

  
	
  Less than ***

  	
   

  	
  *** PMPM

  	
   

  	
  ***

  	
   

  

 

If PARTICIPATING MEDICAL GROUP’s
PMPM OPDE is less than the OPDE Target, an additional $0.10 PMPM will be due to
PARTICIPATING MEDICAL GROUP if PARTICIPATING MEDICAL GROUP’s Formulary
utilization is equal to or greater than 95%.

 

	
  Formulary Utilization:

  	
   

  	
  Is the quotient of the number of
  prescriptions for Members with outpatient prescription drug benefits assigned
  to PARTICIPATING MEDICAL GROUP using drugs listed in the Blue Cross of
  California Outpatient Prescription Drug Formulary divided by the total number
  of prescriptions for Members with outpatient prescription drug benefits
  assigned to PARTICIPATING MEDICAL GROUP.

  

 

(Non-CAP)

 

2Exhibit 10.132

 

PACIFICARE OF CALIFORNIA

MEDICAL GROUP/IPA SERVICES AGREEMENT

(PROFESSIONAL CAPITATION)

 

THIS
PACIFICARE MEDICAL GROUP/IPA SERVICES AGREEMENT (this “Agreement”) is made and
entered into this 1st day of January, 2001, by and between PACIFICARE OF
CALIFORNIA, INC., a California corporation (“PacifiCare”), and Prospect Medical
Group (“Medical Group”), with reference to the following facts:

 

WHEREAS,
PacifiCare operates various prepaid health plans for the provision of Covered
Services to persons enrolled as Members in such plans in a manner consistent
with the laws of the State of California and the United States; and

 

WHEREAS,
Medical Group and its Participating Providers desire to participate in
PacifiCare’s prepaid health service delivery system by providing or arranging
for Covered Services to Members on a prepaid basis in coordination with
PacifiCare and its Participating Providers under the terms specified in this
Agreement.

 

NOW,
THEREFORE, it is agreed as follows:

 

ARTICLE 1

DEFINITIONS

 

Whenever used
in this Agreement, the following terms shall have the definitions contained in
this Article 1:

 

1.1           Accreditation
Organization is any organization, including, without limitation, the
National Committee for Quality Assurance (NCQA), engaged in accrediting or
certifying PacifiCare, any Managed Care Plans, or any Participating Providers.

 

1.2           Agreement is this Medical Group/IPA
Services Agreement between PacifiCare and Medical Group, and any amendments,
exhibits and attachments hereto, including Product Attachments.

 

1.3           Base Agreement is this Medical
Group/IPA Services Agreement between PacifiCare and Medical Group, and any
amendments, exhibits and attachments hereto, excluding Product Attachments.

 

1.4           Capitation Payments are monthly
payments made to Medical Group on a prepaid basis for Covered Services provided
or arranged by Medical Group under this Agreement.

 

1.5           Commencement Date is the commencement
date of this Agreement as

 

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

 

 

1

 

specified in Section 6.1.

 

1.6           Copayment is a fee that may be
charged to Members for certain Medical Group Services and collected by Medical
Group or its Participating Providers at the time Medical Group Services are
provided, as set forth in the applicable Managed Care Plan.

 

1.7           Cost of Care is the valuation of
Covered Services and other health care services provided or arranged by Medical
Group, as described in Section 5.7.

 

1.8           Covered Services are those medically
necessary health care services, supplies and benefits which are required by a
Member as determined by Medical Group or PacifiCare in accordance with the
Member’s Managed Care Plan and PacifiCare’s Quality Improvement Program and
Utilization Management Program.  For
purposes of this Agreement, “medically necessary” shall have the meaning set
forth in the applicable Subscriber Agreement.

 

1.9           Division of Financial Responsibility
is the matrix for each Managed Care Plan which specifies the financial
responsibility for Covered Services between PacifiCare, Medical Group and the
Hospital Incentive Program.  The
Division of Financial Responsibility is an integral part of this Agreement.

 

1.10         Eligibility List is the list of Members
for whom Medical Group shall provide or arrange Covered Services.

 

1.11         Emergency Services are Covered Services
required by a Member as the result of a medical condition manifesting itself by
the sudden onset of symptoms of sufficient severity, which may include severe
pain, such that a reasonable person would expect the absence of immediate
medical attention to result in: (i) placing the health of the Member in serious
jeopardy; (ii) serious impairment to bodily functions; or (iii) serious
dysfunction of any bodily part.  The
final determination of whether Emergency Services were required shall be made
by the PacifiCare medical director or designee, subject to appeal under the
applicable Member appeals procedure.

 

1.12         Government Agency shall mean any local,
State or Federal government agency or entity with regulatory or other authority
over PacifiCare, this Agreement or any Managed Care Plan.

 

1.13         Hospitals are licensed acute care
hospitals in the Medical Group Service Area which have entered into a written
agreement with PacifiCare to provide Hospital Services to Members.

 

1.14         Hospital Services are Covered Services
for Medical Group Members which are initially paid for by PacifiCare and are
the shared financial responsibility of PacifiCare and Medical Group, as
specified in the Hospital Incentive

 

2

 

Programs set forth in the Product Attachments.  A summary of Hospital Services is set forth
in the Division of Financial Responsibility for each Managed Care Plan.

 

1.15         Insolvent or the condition of
Insolvency means that Medical Group or any management company providing
material management services to Medical Group (i) ceases or fails to be
solvent, or generally fails to pay, or admits in writing its inability to pay
its debts as they become due, subject to applicable grace periods, if any,
whether at stated maturity or otherwise; (ii) fails to maintain the financial
reserves specifically required either by this Agreement or State and Federal
Law or otherwise agreed to in writing by the parties; (iii) voluntarily ceases
to conduct its business in the ordinary course; (iv) commences any Insolvency
proceeding with respect to itself; or (v) takes any action to effectuate or
authorize an Insolvency proceeding.  No
Insolvency shall be deemed to exist if such conditions are solely the result of
PacifiCare’s failure to pay Medical Group amounts that are currently due and
payable by PacifiCare after consideration of PacifiCare’s withhold, recoupment,
offset and other rights pursuant to this Agreement.

 

1.16         Managed Care Plan is any one of the
various health plans or products sponsored or administered by PacifiCare or its
subsidiaries or affiliates including, without limitation, a commercial prepaid
health plan (“PacifiCare Commercial Health Plan”), a commercial
point-of-service plan (“PacifiCare Commercial POS Health Plan”), and a Medicare
+ Choice plan (“Secure Horizons Health Plan”). Each Managed Care Plan is
described in the applicable Subscriber Agreement and Product Attachment.  PacifiCare may make available some, and not
all, of the Managed Care Plans under this Agreement.  For purposes of this Agreement, PacifiCare Affiliates shall mean
all entities which currently are controlled by, controlling, or under common
control with PacifiCare or which in the future may be controlled by,
controlling, or under common control with PacifiCare, including, without
limitation, PacifiCare Life and Health Insurance Company and PacifiCare Life
Assurance Company.  When a PacifiCare
Affiliate is responsible for payment under this Agreement, “PacifiCare” shall
mean and refer to the PacifiCare Affiliate.

 

1.17         Medical Group Facility is each office
of Medical Group and its Participating Providers, identified in Exhibit
1 to this Agreement, where Medical Group Services may be provided to Medical
Group Members.

 

1.18         Medical Group Members are the Members
listed on the Eligibility List.

 

1.19         Medical Group Service Area is the
geographic area as defined in Exhibit 1 to this Agreement.

 

1.20         Medical Group Services are Covered
Services for Medical Group Members

 

3

 

which are the financial responsibility of Medical Group, as specified
in the Division of Financial Responsibility for each Managed Care Plan.

 

1.21         Member is an individual who is enrolled
in a Managed Care Plan and meets all the eligibility requirements for
membership in the Managed Care Plan and for whom the applicable Premium has
been received by PacifiCare.

 

1.22         Out-of-Area Medical Services are those
Urgently Needed Services and Emergency Services provided while a Member is
outside the Medical Group Service Area which would have been the financial
responsibility of Medical Group had the services been provided within the
Medical Group Service Area.  Medical
Services which are to be provided outside of the Medical Group Service Area and
are arranged by Medical Group for assigned Members are not considered
Out-of-Area Medical Services.

 

1.23         Participating Providers are (i)
physicians and health care professionals who are shareholders, partners or
employees of Medical Group and (ii) physicians, medical groups, individual
practice associations (“IPA”), health care professionals, hospitals, facilities
and other providers of health care services or supplies that have entered into
written contracts with PacifiCare, Medical Group or Hospital to provide Covered
Services to Members pursuant to Managed Care Plans.

 

l .24         Premium is the payment for Covered
Services under each Managed Care Plan as defined in the applicable Product
Attachment.

 

1.25         Primary Care Physician is any of
Medical Group’s Participating Providers who meet PacifiCare’s criteria for
providing initial and primary care Covered Services to Medical Group Members,
for maintaining the continuity of patient care, and for initiating and
coordinating referrals for Covered Services to Medical Group Members.

 

1.26         Product Attachments are the attachments
to the Base Agreement which set forth additional terms and conditions under
which Medical Group shall provide or arrange Covered Services to Medical Group
Members pursuant to the Managed Care Plans. 
All Product Attachments which are signed by both PacifiCare and Medical
Group shall become a part of this Agreement and are incorporated herein.

 

1.27         Provider Manual is the PacifiCare
Provider Policies and Procedures Manual and related written materials which
shall be provided to Medical Group by PacifiCare prior to or concurrent with
the execution of this Agreement.  The
Provider Manual is incorporated into this Agreement, and may be updated from
time to time by PacifiCare as provided in this Agreement.

 

1.28         Quality Management and Improvement (“QI”)
Program are those standards,

 

4

 

protocols, policies and procedures adopted by PacifiCare to monitor and
improve the quality of clinical care and quality of services provided to
Members.  The QI Program is described in
the Provider Manual, and may be updated from time to time by PacifiCare as
provided in this Agreement.

 

1.29         State and Federal Law shall mean any
and all laws and regulations of the State of California or of the United States
and all orders and other requirements of any government agency which are
applicable to PacifiCare, this Agreement, Managed Care Plans, and Medical Group
and its Participating Providers.

 

1.30         Subscriber Agreement and Evidence of
Coverage are the PacifiCare documents that describe the costs, benefits or
services, procedures, conditions, limitations, exclusions, and other
obligations to which Members are entitled and subject to under a Managed Care
Plan.  A copy of a current standard
Subscriber Agreement and Evidence of Coverage for each Managed Care Plan shall
be provided to Medical Group by PacifiCare and may be updated from time to time
by PacifiCare.

 

1.31         Subscriber or Subscriber Group is the
individual or employer, organization, firm or other entity which contracts with
PacifiCare under a Subscriber Agreement to obtain the benefits of a Managed
Care Plan.

 

1.32         Urgently Needed Services are Covered
Services under a Managed Care Plan which are required without delay in order to
prevent the serious deterioration of a Member’s health as a result of an
unforeseen illness or injury and it was not reasonable given the circumstances
to obtain the services in accordance with the terms of the applicable Managed
Care Plan.

 

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

 

ARTICLE 2

DUTIES OF MEDICAL GROUP

 

2.1           Provide or Arrange Covered Services.  Medical Group, through its Participating
Providers, shall provide or arrange Covered Services in the Medical Group
Service Area to Medical Group Members, in coordination with PacifiCare and
PacifiCare’s Participating Providers and in accordance with the terms and
conditions set forth in this Agreement and the Managed Care Plans.  Medical Group shall be financially
responsible for Medical Group Services.

 

2.2           Professional Standards.  The primary concern of Medical Group and its

 

5

 

Participating Providers under this Agreement shall be the quality of
Covered Services provided to or arranged for Medical Group Members.  Nothing stated in this Agreement shall be
interpreted to diminish this responsibility. 
All Covered Services provided or arranged by Medical Group shall be
provided or arranged by duly licensed, certified or otherwise authorized
professional personnel in a culturally competent manner and at physical
facilities in accordance with (i) the generally accepted medical and surgical
practices and standards prevailing in the applicable professional community at
the time of treatment, (ii) the provisions of PacifiCare’s QI Program and UM
Program, (iii) the requirements of State and Federal Law and (iv) the standards
of Accreditation Organizations.

 

PacifiCare and Medical Group acknowledge and agree that Medical Group
or each of Medical Group’s Participating Providers shall maintain the
physician-patient relationship with each Medical Group Member.  Nothing contained in this Agreement is
intended to interfere with such physician-patient relationship.  Nothing in this Agreement shall be
interpreted to discourage or prohibit Medical Group and its Participating
Providers from discussing treatment options or providing other medical advice
or treatment deemed appropriate by Medical Group or its Participating
Providers.  Medical Group or its
Participating Providers shall have the sole responsibility for the medical care
and treatment of Medical Group Members.

 

2.2.1        Licensure of Medical Group.  Medical Group is legally organized and
incorporated under the laws of the State of California.  Medical Group shall maintain in good
standing at all times during the term of this Agreement any and all licenses,
certificates and/or approvals required under State and Federal Law for the
performance by Medical Group of the duties required by this Agreement.

 

Medical Group shall notify PacifiCare upon receiving any notice from
the Department of Corporations or any other entity with the regulatory or
contractual authority to audit Medical Group relating to compliance with
applicable law, including, without limitation, notices of medical surveys or
financial audits.

 

2.2.2        Licensure/Certification of Medical Group’s
Participating Providers.  Each of
Medical Group’s Participating Providers shall maintain in good standing at all
times during the term of this Agreement the necessary licenses or
certifications required by State and Federal Law and by the Managed Care Plans
to provide or arrange Covered Services to Medical Group Members.

 

2.2.3        Hospital Privileges for Medical Group’s
Participating Providers.  Unless
otherwise specified by Medical Group and approved by PacifiCare for specific
Participating Providers, each of Medical

 

6

 

Group’s Participating Providers who is a physician shall maintain in
good standing at all times during the term of this Agreement medical staff
membership and clinical privileges at Hospital necessary to provide or arrange
Covered Services to Medical Group Members.

 

2.3           Medical Group’s Participating Providers.  Medical Group shall have a sufficient number
of Participating Providers throughout the Medical Group Service Area to provide
or arrange Covered Services and meet the needs of PacifiCare and Medical Group
Members as determined by PacifiCare’s QI Program and in accordance with State
and Federal Law.  Medical Group’s
Participating Providers shall provide or arrange Covered Services, including
Emergency Services, to Medical Group Members twenty-four (24) hours a day,
seven (7) days a week.  Medical Group’s
Participating Providers must meet PacifiCare’s credentialing standards and must
be approved by PacifiCare before providing or arranging Covered Services to
Medical Group Members.

 

2.3.1        Participating Provider Information.  Medical Group shall provide PacifiCare with
a complete list of its Participating Providers, together with the provider
specific information required by PacifiCare for credentialing and for
administration of the Managed Care Plans, at the time this Agreement is signed.

 

2.3.2        Notice of Participating Provider Additions.  Medical Group shall use its best efforts to
provide at least sixty (60) calendar days prior written notice to PacifiCare of
the addition of any Participating Providers. 
Such notice shall include the provider-specific information required by
PacifiCare.  All Participating Providers
must be approved by PacifiCare before providing or arranging Covered Services
to Medical Group Members.  PacifiCare
shall use its best efforts to approve Participating Providers as quickly as
possible after receiving the written notice from Medical Group.

 

2.3.3        Notice of Participating Provider
Terminations.  Medical Group shall provide
ninety (90) calendar days’ prior written notice to PacifiCare of the
termination of any of its Participating Providers; provided, however, that if
any Participating Providers are 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.  Notwithstanding the
termination of any Participating Providers, Medical Group shall remain
responsible for providing or arranging Covered Services through its remaining
Participating Providers and shall remain financially responsible for Medical
Group Services provided to Medical Group Members under this Agreement.

 

7

 

2.3.4        Restriction, Suspension or Termination of
Participating Providers.

 

Medical Group shall, as warranted, immediately restrict, suspend or
terminate its Participating Providers from providing or arranging Covered
Services to Medical Group Members in the following circumstances: (i) the
Participating Provider ceases to meet the licensing/certification requirements
or other professional standards described in this Agreement; (ii) PacifiCare or
Medical Group reasonably determines that there are serious deficiencies in the
professional competence, conduct or quality of care of the Participating
Provider which affects or could adversely affect the health or safety of
Medical Group Members; or (iii) the Participating Provider files an affidavit
with the Medicare Program promising to furnish Medicare-covered services to
Medicare beneficiaries only through private contracts under Section 1802 (b) of
the Social Security Act.  Medical Group
shall immediately notify PacifiCare of any of its Participating Providers who
cease to meet the licensing/certification requirements or other professional
standards described in this Agreement and Medical Group’s actions under this
Section.  If Medical Group fails to act
as required by this Section with respect to any of its Participating Providers,
PacifiCare shall have the right to immediately prohibit such Participating
Providers from continuing to provide Covered Services to Medical Group Members.

 

2.3.5        Adverse Changes in Capacity.  Medical Group and its Participating
Providers will continue to accept Members enrolled by PacifiCare for so long as
Medical Group and its Participating Providers have the capacity to provide and
arrange Covered Services under this Agreement and for so long as Medical Group
continues to accept new patients from any HMO or other prepaid health
plan.  Medical Group shall provide at
least ninety (90) calendar days’ prior written notice to PacifiCare of any
significant changes in the capacity of Medical Group to provide or arrange
Covered Services that would prevent Medical Group from accepting additional
Members.  Medical Group shall use
reasonable efforts to eliminate or remedy any condition which results in a
significant adverse change in capacity. 
A significant change in capacity includes, without limitation, the
following: (i) inability of Medical Group to properly serve additional Members
due to a lack of Primary Care Physicians or other Participating Providers; (ii)
inability of any one of Medical Group’s Primary Care Physicians or other
Participating Providers to serve additional Members; or (iii) closure of any
Medical Group Facility.  PacifiCare may
continue to enroll Members with Medical Group until the expiration of the
notice period required under this Section, and in such event, Medical Group and
its Primary Care Physicians and other Participating Providers shall continue to
accept such Members.  PacifiCare shall
discontinue the enrollment of Members with Medical Group upon expiration of the
notice period required under this Section until such time, if any, that

 

8

 

Medical Group provides written notification to PacifiCare that it has
the capacity to accept additional Members.

 

2.4           Medical Group’s Subcontracts with
Participating Providers.  Medical Group
shall demonstrate and certify to PacifiCare prior to the Commencement Date and
upon PacifiCare’s written request at any time during the term of this Agreement
(in the format specified by PacifiCare) that its subcontracts with
Participating Providers comply with requirements of this Agreement.  Medical Group shall amend any and all of its
existing subcontracts with Participating Providers which do not comply with
this Agreement within thirty (30) calendar days following the execution of this
Agreement and shall provide PacifiCare with written certification thereof.  Without limiting any other provision of this
Agreement, all of Medical Group’s subcontracts shall contain the requirements
set forth at Sections 8.3.3 of this Agreement pertaining to the provision of
Covered Services in Special Circumstances.

 

2.4.1        Compliance with Provisions of Agreement.  Medical Group’s subcontracts with
Participating Providers shall be in writing. 
All such subcontracts shall be consistent with the terms and conditions
of this Agreement (including the Product Attachments) and shall meet
PacifiCare’s requirements for Participating Provider subcontracts.  If this Agreement is amended or modified,
all such subcontracts shall be amended or modified within ninety (90) calendar
days to be consistent with such amendments or modifications.

 

2.4.2        Compliance with Standards of Accreditation
Organizations and Requirements of State and Federal Law.  Medical Group’s subcontracts with
Participating Providers shall comply with the standards of Accreditation
Organizations and requirements of State and Federal Law.  If there are changes in such standards
and/or requirements, Medical Group shall amend its subcontracts with
Participating Providers to comply with such changes within thirty (30) calendar
days following notice thereof from PacifiCare.

 

2.4.3        Access by PacifiCare, Accreditation
Organizations and Government Agencies to Subcontracts and Books and Records of
Participating Providers.  Medical
Group shall make available for inspection, examination and copying by
PacifiCare, Accreditation Organizations and Government Agencies during normal
business hours (i) its Participating Provider subcontracts and (ii) books and
records of its Participating Providers relating to Covered Services provided to
Medical Group Members, Copies of subcontracts and the books and records of
Participating Providers shall be maintained for at least six (6) years from the
close of the fiscal year in which the Covered Services were provided.

 

9

 

2.4.4        Medical Group’s Responsibility for Providing
or Arranging Covered Services. 
Notwithstanding the existence of Medical Group’s subcontracts with its
Participating Providers, Medical Group shall remain responsible for satisfying
the obligations of Medical Group set forth in this Agreement.  If any of Medical Group’s subcontracts with
Participating Providers are terminated, Medical Group shall remain responsible
for providing or arranging Covered Services through its remaining Participating
Providers and shall remain financially responsible for Medical Group Services
provided to Medical Group Members under this Agreement.

 

2.4.5        Performance of Subcontract Rights.  Medical Group’s subcontracts shall require
its Participating Providers who are independent contractors to agree to perform
their obligations under their subcontract for the benefit of PacifiCare in the
event of dissolution or Insolvency of Medical Group, in the event of
termination of this Agreement by PacifiCare for cause pursuant to Section 2.4.5
or in the event of termination by PacifiCare pursuant to Section x.x.  Such obligation shall continue through the
continuing care period provided by this Agreement.  Medical Group’s subcontracts shall provide that in the event
PacifiCare exercises such option, Medical Group’s subcontractors agree to
accept payment from PacifiCare, as payment in full, at rates which are the
lesser of the Cost of Care or the rate set forth in the applicable subcontract.  To the extent Medical Group’s subcontracts
do not comply with the requirements of this Section 2.4.5 as of the date this
Agreement is executed and delivered, Medical Group shall cause its subcontracts
to be amended to comply with the forgoing by January 1, 2001

 

2.5           Acceptance and Transfer of Members.  Medical Group and its Participating
Providers may not impose any limitations on the acceptance of Members for care
or treatment that are not imposed on other patients.  PacifiCare, Medical Group and its Participating Providers shall not
request, demand, require or seek directly or indirectly the transfer, discharge
or removal of any Member for reasons of Member’s need for, or utilization of,
Covered Services, except in accordance with the procedures established by
PacifiCare for such action.  Medical
Group and its Participating Providers shall not refuse or fail to provide or
arrange Covered Services to any Member.

 

PacifiCare and Medical Group shall exercise reasonable efforts in
following the procedures for transfer, discharge or removal of Members as set
forth in the Provider Manual. 
Nevertheless, PacifiCare may require transfer of Medical Group Members
for any reason, with notification to Medical Group’s medical director, and
Medical Group may request that PacifiCare transfer Medical Group Members to
another of PacifiCare’s Participating Providers if Medical Group is unable to
provide the Covered Services required by this Agreement for reasons related to
capacity of Medical Group and its

 

10

 

Participating Providers.  In
addition, Medical Group may request that PacifiCare transfer a Medical Group
Member to another of PacifiCare’s Participating Providers in the event of a
material breakdown in the physician-patient relationship.  PacifiCare shall evaluate such requests
considering the best interests of the Member. 
In the event PacifiCare grants a request for transfer of a Member by
Medical Group, the transfer shall not be effective until the end of the month
following the month in which the Member receives notice of transfer, unless the
Member agrees to an earlier transfer and PacifiCare has made arrangements with
another of PacifiCare’s Participating Providers to accept the Member.

 

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

 

2.7           Insurance.  Medical Group, at its sole cost and expense, shall maintain
throughout the term of this Agreement and, if coverage is provided on a
claims-made basis, for a period of four years following termination of this
Agreement, professional liability insurance (i.e., medical malpractice
insurance) and, if delegated for any Managed Care Services, managed care errors
and omissions insurance in the minimum amount of one million dollars

 

11

 

($1,000,000) per occurrence and three million dollars ($3,000,000)
annual aggregate, the annual aggregate to apply separately for each physician
and health care practitioner who is insured under the policy (or policies)
purchased by Medical Group.

 

Medical Group, at its sole cost and expense, shall also maintain
throughout the term of this Agreement, workers’ compensation insurance as
required by the State of California and general liability insurance, including
but not limited to premises, personal injury and contractual liability
insurance, in a minimum amount of one million dollars ($1,000,000) per
occurrence, combined single limit, bodily injury and property damage, to insure
Medical Group and its employees, agents, and representatives against claims for
damages arising by reason of (i) personal injuries or death occasioned in
connection with the performance of any Covered Services provided under this
Agreement, (ii) the use of any property and facilities of the Medical Group,
and (iii) activities performed in connection with this Agreement.

 

Medical Group’s Participating Providers who are not insured under the
Medical Group’s policy (or policies) shall maintain the same insurance coverage
required of Medical Group under this Section, unless otherwise consented to by
PacifiCare in writing.

 

All insurance required under this Agreement shall be provided by
insurers licensed to do business in the State of California and who have
obtained an A.M.  Best rating of A:VIII
or better.

 

If any of the required coverage is proposed to be provided by a self
insurance agreement, a wholly owned insurance subsidiary (captive) or a risk
retention group, the above insurance requirements may be waived in the sole
discretion of PacifiCare, but only after review of the self insured’s,
captive’s or risk retention group’s audited financial statement and latest
actuarial report.

 

A certificate of insurance shall be issued to PacifiCare prior to the
Commencement Date and upon the renewal of the insurance coverage specified in
this Section.  The certificate shall
provide that PacifiCare shall receive thirty (30) days’ prior written notice of
cancellation or material reduction in the insurance coverage specified in this
Section.  Notwithstanding anything to
the contrary, if Medical Group has a claims-made based policy and anticipates
that such policy (or policies) will be canceled or not renewed, Medical Group
agrees to exercise any option contained in the policy (or policies) to extend
the reporting period to the maximum period permitted; provided, however, that
Medical Group need not exercise such option if the superseding insurer will
accept all prior claims. 
Notwithstanding any other provision of this Agreement, failure to
provide the certificate of insurance shall be grounds for immediate termination
of this Agreement.

 

12

 

2.8           Financial Statements.

 

2.8.1        Copies of Financial Statements.  Medical Group shall provide to PacifiCare
within forty-five (45) calendar days of the end of each calendar quarter copies
of its quarterly financial statements, which shall include a balance sheet,
statement of income and statement of cash flow (the “Financial Statements”)
prepared in accordance with generally accepted accounting principles.  Such quarterly Financial Statements shall be
certified by the chief financial officer of Medical Group as accurately
reflecting the financial condition of Medical Group, including without
limitation, its operations in the Medical Group Service Area for the period
indicated.  In addition, Medical Group
shall provide to PacifiCare, within forty-five (45) calendar days of the end of
each fiscal year, copies of its audited annual Financial Statements together
with copies of all auditor’s letters to management in connection with such
audited annual financial statements.

 

2.8.2        Letter of Credit.  As a material condition to PacifiCare’s
obligations pursuant to this Agreement, Medical Group shall obtain for the
benefit of PacifiCare a Letter of Credit to secure the obligations of Medical
Group under this Agreement (“Letter of Credit”).

 

The Letter of Credit shall be in the minimum amount of ***, which
amount shall be increased with the mutual consent of Medical Group as
reasonably determined by PacifiCare from time to time throughout the term of this
Agreement (but not more often than semi-annually) to equal three (3) months of
Medical Group’s IBNP Expenses, as defined below.

 

All the terms and conditions of the Letter of Credit shall be subject
to PacifiCare’s approval.  Without
limiting the foregoing, the Letter of Credit shall provide that at such time
that Medical Group is Insolvent, the Letter of Credit funds shall be
unconditionally available to PacifiCare to satisfy Medical Group’s obligations
under this Agreement.  The Letter of
Credit shall be effective as of the Commencement Date and shall remain in full
force and effect throughout the entire term of this Agreement.  In the event Medical Group fails to maintain
a Letter of Credit for the entire term of the Agreement, PacifiCare shall
withhold *** of Medical Group’s monthly Capitation Payments until the total
amount of capitation withheld pursuant to this Section 2.8.2 is ***. Any
amounts withheld pursuant to this Section shall be used to secure Medical
Group’s obligations under this Agreement.

 

PacifiCare shall not be responsible for any cost, expense, or

 

13

 

administrative fee in connection with the establishment or maintenance
of the Letter of Credit.  IBNP Expense
shall mean all provider liabilities that are incurred but not paid (IBNP) for
PacifiCare Members.  Medical Group’s
IBNP liabilities shall include estimated provider claims that have been
incurred but not paid and provider capitation for periods where PacifiCare has
paid capitation to Medical Group, but Medical Group has not paid capitation to
its capitated Participating Providers.

 

2.9           Administrative
Requirements

 

2.9.1        Administrative Guidelines.  Medical Group agrees to perform its duties
under this Agreement in accordance with the administrative guidelines, policies
and procedures set forth in the Provider Manual and State and Federal Law.  Medical Group shall be responsible for
distributing copies of the Provider Manual, as necessary, to its Participating
Providers.

 

2.9.2        Medical Director, Health Plan Coordinator,
Quality Improvement Committee and Utilization Management Committee.  Medical Group shall designate one of its
Participating Providers who is a physician or osteopath to act as Medical
Group’s medical director and shall designate an individual to act as the health
plan coordinator with PacifiCare.  The
duties of Medical Group’s medical director and health plan coordinator shall be
set forth in the Provider Manual.  In
addition, Medical Group shall establish and maintain a quality improvement
committee and a utilization management committee to assist PacifiCare in
implementing the QI Program and UM Program with respect to PacifiCare Members.

 

2.9.3        Participation in PacifiCare Orientation and
Training Programs.  Medical Group shall
require its administrative personnel and its Participating Providers to
participate in PacifiCare’s orientation and training programs.

 

2.9.4        Encounter Data.  Medical Group shall maintain and provide to
PacifiCare, no later than the fifteenth (15th) day of each month, (i) the
utilization data pertaining to Covered Services which are provided directly by
Medical Group and its Participating Providers and (ii) the utilization data
pertaining to Covered Services which are paid for by Medical Group during the
preceding month, including data not provided in the most recent submission, as
required by PacifiCare (the “Encounter Data”). Medical Group shall submit
Encounter Data in accordance with the procedures and standards established by
PacifiCare.  Medical Group shall submit
Encounter Data in an electronic format acceptable to PacifiCare.

 

14

 

For each month in which Medical Group fails to submit Encounter Data
described above in this Section, PacifiCare shall deduct one percent (1%) of
the Medical Group’s Capitation Payment until such data is submitted.

 

2.9.5        General Data and Information Requirements.  Medical Group shall maintain and provide to
PacifiCare, upon written request, any and all information required by
PacifiCare, State and Federal Law, Government Agencies or Accreditation
Organizations for the administration of Managed Care Plans.  Medical Group shall submit such information
and data to PacifiCare in the format and within the time periods specified by
PacifiCare.  Medical Group shall
accurately and completely maintain all Encounter Data, all other information
and data required by this Agreement, including medical records, necessary to
characterize the scope and purpose of Covered Services provided to
Members.  Medical Group shall provide to
PacifiCare and to HCFA any required certification as to Medical Group’s
compliance with the foregoing.

 

2.10         Medical Group’s Failure to Comply with
Agreement, Provider Manual or Managed Care Plans.  If Medical Group fails to comply with any provision(s) of this
Agreement, the Provider Manual or the Managed Care Plans, PacifiCare may
provide written notice of such failure to Medical Group, specifying a date at
least thirty (30) days following the date of the notice by which Medical Group
must be in compliance with such provision(s), as reasonably determined by
PacifiCare.  If Medical Group fails to
comply with such provision(s) by the date specified in the notice, PacifiCare shall
have the right to cease marketing efforts on behalf of Medical Group and/or
discontinue assignment of Members to Medical Group until such time as Medical
Group complies with such provision(s), as reasonably determined by
PacifiCare.  In addition, PacifiCare
shall have the right to either (i) collect from Medical Group or (ii) recoup
against amounts due Medical Group under this Agreement, any penalties or other
monetary amounts payable by PacifiCare to Government Agencies, Subscriber
Groups, Participating Providers or any other health care providers as a result
of Medical Group’s failure to comply with any provision(s) of this Agreement,
the Provider Manual or Managed Care Plans. 
PacifiCare’s rights and remedies under this Section shall be in addition
to all other rights and remedies available to PacifiCare to enforce this
Agreement, including the right of termination.

 

2.11         Reciprocity Arrangements.  If any Member who is not a Medical Group
Member or if any individual who is enrolled in a benefit plan and program of
any PacifiCare affiliated entity (“PacifiCare Affiliate”) receives services or
treatment from Medical Group or its Participating Providers, Medical Group or
the Participating Provider agrees to bill PacifiCare or the PacifiCare

 

15

 

Affiliate (or their respective designees), as applicable, at billed
charges and to accept the Cost of Care amount less any applicable Copayments,
coinsurance and/or deductibles as payment in full for such services or
treatment.  PacifiCare or the PacifiCare
Affiliate will process payment for such services or treatment in accordance
with the payment procedures for the applicable benefit plan or program.

 

If any Medical Group Member receives Covered Services from a PacifiCare
Participating Provider or PacifiCare Affiliate contracted provider, PacifiCare
shall, where contractually available, provide reciprocity to Medical Group at
PacifiCare rates for such Covered Services. 
Medical Group shall comply with the procedures established by PacifiCare
or the PacifiCare Affiliate for reimbursement of such Covered Services.

 

Only medically appropriate Covered Services, as determined by
PacifiCare, shall be subject to the reciprocity arrangement specified in this
Section.  Medical Group shall abide by
all provisions of this Agreement relating to non-billing of Members with
respect to all services and treatment subject to this reciprocity arrangement.

 

2.12         Hospital Admissions.  In recognition of the need for coordination,
continuity, and quality of care of Covered Services provided to Medical Group
Members, Medical Group agrees to utilize Hospital(s) as provider of Hospital
Services for Medical Group Members, subject to the following exceptions:

 

(i)            Medical Group Members admitted for
Emergency Services or Urgently Needed Services; and

 

(ii)           Medical Group Members requiring Hospital
Services not available at Hospital.

 

2.13         PacifiCare Rights in the Event of
Insolvency of Medical Group.  In the
event that Medical Group is determined to be Insolvent by PacifiCare’s
independent accountants and Medical Group has had an opportunity to review
these findings, Medical Group shall be in material breach of this
Agreement.  Upon such breach, PacifiCare
shall, without waiving any of its other rights under this Agreement, including
the rights set forth above, and rights of termination, have the following
rights to:

 

(i)            Increase withholds for the payment of
claims as provided pursuant to Section 5.3 of this Agreement;

 

(ii)           Cease enrollment of PacifiCare Members with
Medical Group, transfer Members, and cease marketing efforts;

 

(iii)          Require Medical Group, at its cost, to
retain, on terms and conditions acceptable to PacifiCare, a third party manager
approved by PacifiCare

 

16

 

to assist Medical Group in addressing its financial and operational
problems.

 

ARTICLE 3

ADMINISTRATIVE DUTIES OF PACIFICARE

 

3.1           Administration and Provision of Data.  PacifiCare shall perform administrative,
accounting, enrollment, eligibility verification and other functions necessary
for the administration and operation of the Managed Care Plans.  PacifiCare shall provide Medical Group with
management information and data reasonably necessary to carry out the terms and
conditions of this Agreement and for the operation of the Managed Care Plans.

 

3.2           Marketing.  PacifiCare shall make reasonable efforts to market the Managed
Care Plans.  Medical Group agrees that
PacifiCare may, use Medical Group’s name, address and telephone number as well
as the names, addresses and telephone numbers and specialties of its
Participating Providers in PacifiCare’s marketing and informational materials
including, without limitation, PacifiCare’s directory of Participating
Providers.  Nothing in this Agreement
shall be deemed to require PacifiCare to conduct any specific marketing
activities on behalf of Medical Group and its Participating Providers or to
identify Medical Group or its Participating Providers in any specific
PacifiCare marketing or informational materials.

 

3.3           Enrollment and Assignment of Members.  PacifiCare shall be responsible for
distributing the PacifiCare Enrollment Packet to Members upon enrollment and at
open enrollment periods.  PacifiCare
shall provide benefit information to Members concerning the type, scope and
duration of benefits to which Members are entitled under the Managed Care
Plans.  Nothing in this Agreement shall
be construed to require PacifiCare to assign any minimum or maximum number of
Members to Medical Group or to utilize Medical Group for any Members in the
Medical Group Service Area.

 

3.4           Eligibility Information.  PacifiCare shall provide the Eligibility
List to Medical Group on or about the fifteenth (15th) day of each month.

 

3.5           Benefit Design and Interpretation;
Coverage Decisions.  PacifiCare
shall be solely responsible for the benefit design of all Managed Care Plans,
including establishing benefits, Premiums and Copayments.  PacifiCare shall be solely responsible for
interpreting the terms of and making final coverage determinations under the
Managed Care Plans.

 

3.6           Case Management.  PacifiCare shall manage and coordinate
Covered Services for Medical Group Members (including Emergency Services and
Urgently Needed Services) with complex medical conditions to ensure that care
is provided in a manner which encourages quality, continuity of care and cost-

 

17

 

effectiveness (“Case Management”). Medical Group shall cooperate fully
with PacifiCare in providing information that may be required in determining
the need for Case Management and in the transfer of Medical Group Members to
designated PacifiCare Participating Providers for cost effective care.

 

3.7           Out-of-Area Medical Services.  PacifiCare shall manage and coordinate
Out-of-Area Medical Services.  Medical
Group shall cooperate fully with PacifiCare in providing information that may
be required for transferring Members back into the Medical Group Service Area,
including promptly notifying PacifiCare of known or suspected Out-of-Area
Medical Services, and shall accept the prompt transfer of Members to the care
of Medical Group and its Participating Providers following the receipt of
Out-of-Area Medical Services. 
PacifiCare, in conjunction with Medical Group and Hospital, shall make
all decisions regarding the duration of a Member’s care at the Out-of-Area
facility and transfer of the Member to a Medical Group Service Area facility.

 

ARTICLE 4

MANAGED CARE PROGRAM SERVICES

 

4.1           Managed Care Program Services.  Consistent with the requirements of State
and Federal Law and the standards of Accreditation Organizations, PacifiCare
shall be accountable for the performance of the following services for all
Managed Care Plans: (i) quality management and improvement, (ii) utilization
management, (iii) credentialing, (iv) Member rights and responsibilities, (v)
preventive health services, (vi) medical record review and (vii) payment and
processing of claims (collectively, “Managed Care Program Services”). Medical
Group and its Participating Providers shall cooperate with PacifiCare in the
performance of all Managed Care Program Services and conduct their activities
in a manner consistent with the provisions of this Article 4 including
specifically, but without limitation, PacifiCare’s QI Program, UM Program,
Credentialing Program, Member Services activities, and Claims Processing
Guidelines.

 

4.1.1        Quality
Management and Improvement. 
PacifiCare shall maintain an ongoing Quality Management and Improvement
Program (“QI Program”) to assess and improve the quality of clinical care and
the quality of service provided to Members under the Managed Care Plans.  The QI Program shall be maintained in
accordance with the requirements of State and Federal Law and the standards of
Accreditation Organizations.

 

Medical Group shall, at the written request of PacifiCare, make
available its Participating Providers who are physicians to serve on
PacifiCare’s QI Committee.  Medical
Group shall establish and maintain an independent quality improvement committee
which shall

 

18

 

meet as frequently as advisable (but not less than ten (10) times
throughout the year). A member of the PacifiCare medical services staff may
participate in Medical Group’s quality improvement committee meetings.  Medical Group shall keep minutes of its
quality improvement committee and subcommittee meetings, copies of which shall
be made available to PacifiCare upon ten (10) days’ written notice by
PacifiCare to Medical Group.  If the
functions of the quality improvement committee are performed together with its
utilization review committee, Medical Group shall implement and maintain
procedures which maintain all applicable confidentiality protections for
quality assurance activities and decisions.

 

Medical Group shall develop and provide for PacifiCare’s review and
approval written procedures for focused review or remedial action whenever it
is determined by PacifiCare’s QI Committee that inappropriate or substandard
Covered Services have been furnished or Covered Services that should have been
furnished have not been furnished.  Upon
request, PacifiCare shall assist Medical Group in the formulation of such
focused review and remedial procedures.

 

4.1.2        Utilization Management.  PacifiCare shall maintain an ongoing
Utilization Management Program (“UM Program”) to address pre-authorization,
concurrent and retrospective review of the quality, appropriateness, level of
care and utilization of all Covered Services provided or to be provided to
Members under the Managed Care Plans. 
The UM Program shall be maintained in accordance with the requirements
of State and Federal Law and the standards of Accreditation Organizations.

 

Medical Group shall establish and maintain a utilization review
committee which shall meet as frequently as necessary.  A member of the PacifiCare medical services
staff may participate in Medical Group’s utilization review committee
meetings.  Medical Group shall keep
minutes of its utilization review committee meetings, copies of which shall be
made available to PacifiCare upon ten (10) days’ written notice by PacifiCare
to Medical Group.  Medical Group’s
utilization review committee shall review, as necessary, elective referrals and
hospital and skilled nursing facility admissions on a prospective basis, and
Emergency Services and Urgently Needed Services requiring hospital admissions
on a retrospective basis.  The committee
shall also be responsible for monitoring patterns of care, isolating
inappropriate utilization and performing other management and review duties as
specified in the UM Program.

 

4.1.3        Credentialing.  PacifiCare shall maintain standards, policies and procedures for
credentialing and recredentialing physicians, hospitals

 

19

 

and other health care professionals and facilities that provide Covered
Services to Members under the Managed Care Plans (“Credentialing Program”). The
Credentialing Program shall be maintained in accordance with the requirements
of State and Federal Law and the standards of Accreditation Organizations.

 

4.1.4        Member Rights and Responsibilities.  PacifiCare shall inform Members of their
rights and responsibilities under each Managed Care Plan, provide Members with
membership cards and member handbooks, distribute periodic communications to
Members, process Member complaints and grievances and respond to inquiries and
requests from Members regarding Managed Care Plans (collectively “Member
Services”).

 

4.1 5        Preventive Health Services.  PacifiCare shall develop preventive health
guidelines for the prevention and early detection of illness and disease
(“Preventive Health Guidelines”) and shall encourage Members to use preventive
health services.  The Preventive Health
Guidelines shall be maintained in accordance with the standards of
Accreditation Organizations and shall be distributed to Participating
Providers.  Medical Group and its
Participating Providers shall provide preventive health services required
pursuant to the applicable Subscriber Agreements to Medical Group Members in
accordance with the Preventive Health Guidelines.

 

4.1.6        Medical Record Review.  PacifiCare shall on an ongoing basis review
medical records maintained by Medical Group and its Participating Providers to
assess compliance with the requirements of State and Federal Law and the
standards of Accreditation Organizations. 
Medical Group and its Participating Providers shall maintain medical
records in accordance with the provisions of this Agreement regarding medical
records and in accordance with PacifiCare’s guidelines regarding medical
records.

 

4.1.7        Claims Processing.  PacifiCare shall establish and maintain
standards, policies and procedures for the timely and accurate processing and
payment of claims for Covered Services provided to Members (“Claims Processing
Guidelines”). The Claims Processing Guidelines shall be maintained in
accordance with the requirements of State and Federal Law and the Managed Care
Plans.

 

4.1.8        Policies and Procedures.  For Managed Care Program Services not delegated
to Medical Group, Medical Group agrees to abide by PacifiCare’s policies and
procedures pertaining to the administration of such services.  The applicable policies and procedures may
include, but not be limited to, policies and procedures pertaining to

 

20

 

PacifiCare’s Utilization Management Program, Credentialing Program, and
Claims Processing Guidelines.  Such
policies and procedures will outline the non-delegated requirements for claims
submission, subcontract rate information, utilization management, and
credentialing.

 

4.2           Delegation of Managed Care Activities.

 

4.2.1        Delegation Audits and Determinations.  PacifiCare may, in its discretion, delegate
utilization management, credentialing, medical records review, claims
processing, and/or other activities consistent with regulatory and accrediting
standards to Medical Group.  Such
delegation may occur at any time during the term of this Agreement if
PacifiCare determines the Medical Group is capable of performing such
activities and if Medical Group consents in writing to such delegation.  Medical Group’s consent and written
agreement may be evidenced by this Agreement, amendments to this Agreement, or
a separate delegation agreement between PacifiCare and Medical Group.

 

Managed Care Program Services which are delegated to Medical Group
shall be specified in Exhibit 2 to this Agreement (collectively, the “Delegated
Activities”). Exhibit 2 may be amended from time to time during the term of
this Agreement by PacifiCare to reflect changes in delegation standards;
delegation status; performance measures; reporting requirements; and other
provisions of Exhibit 2. Any and all changes to Exhibit 2 shall not be deemed a
material amendment to this Agreement, but shall, to the extent provided at
Section 5.2 of this Agreement result in an automatic adjustment to Medical
Group’s Capitation Payment.

 

4.2.2        Medical Group’s Responsibility for Delegated
Activities.  Medical Group shall be
responsible for the performance of all Delegated Activities, as specified in
Exhibit 2. Medical Group shall have no right to modify Exhibit 2 or Medical
Group’s obligations to perform Delegated Activities without PacifiCare’s prior
written consent.

 

4.2.3        PacifiCare Policies.  For all Delegated Activities, PacifiCare
shall provide Medical Group with PacifiCare’s standards and requirements
applicable to the Delegated Activities, as amended from time to time (the
“PacifiCare Delegation Policies”) and shall notify Medical Group of all substantive
changes to the PacifiCare Delegation Policies. 
Medical Group may utilize its own policies and procedures for the
Delegated Activities, provided that such policies and procedures are consistent
with the PacifiCare Delegation Policies and are provided to PacifiCare for its
review and approval.  If Medical Group’s
policies and procedures are inconsistent with the PacifiCare Delegation

 

21

 

Policies, the PacifiCare Delegation Policies shall apply.

 

4.2.4        Sub-Delegation.  Medical Group shall not further delegate the
performance of Delegated Activities to any of its Participating Providers or
any other organization or entity without the prior written consent of
PacifiCare.

 

4.2.5        Maintenance of Information and Records.  Medical Group shall maintain all information
and records reviewed or created in connection with performing the Delegated
Activities in a form acceptable to PacifiCare, provide PacifiCare with access
to such information and records, and permit PacifiCare to review and copy such
information and records.

 

4.2.6        Reporting Obligations.  Medical Group shall provide PacifiCare with
periodic written reports regarding all Delegated Activities in the formats
specified by PacifiCare for each of the Delegated Activities.  Medical Group’s arrangements with its
Participating Providers shall provide that Medical Group may disclose to
PacifiCare its Participating Provider credentialing files.

 

4.2.7        Monitoring/Audits.  PacifiCare shall oversee Medical Group’s performance
of Delegated Activities through review of periodic written reports provided by
Medical Group as described above and meetings with appropriate Medical Group
representatives and on-site audits and assessments of Medical Group.  Medical Group shall cooperate, participate
and comply with PacifiCare in such monitoring and oversight activities.  Such audits and assessments will be
performed in accordance with the requirements of State and Federal Law and the
standards of Accreditation Organizations, PacifiCare’s Delegation Policies and
the terms of this Agreement.

 

4.2.8        Insurance.  Medical Group shall comply with the insurance provisions of this
Agreement relating to managed care errors and omissions insurance.

 

4.3           Payment for Delegated Activities.  PacifiCare’s payment for Delegated
Activities is specified in Section 5.2 of this Agreement.

 

4.4           Revocation and Resumption of Delegated
Activities.

 

4.4.1        PacifiCare’s Right to Revoke Delegated
Activities.  PacifiCare may, in its
sole discretion, revoke any or all Delegated Activities at any time if
PacifiCare determines that such Delegated Activities are not being performed in
accordance with the standards and requirements established by PacifiCare or if
Medical Croup’s performance of

 

22

 

Delegated Activities is inconsistent with, or in violation of, State
and Federal Law or the standards of any Accreditation Organization.

 

4.4.2        Revocation Notices.

 

(a)           Deficiencies Capable of Cure.  For deficiencies in Medical Group’s
performance of Delegated Activities, which PacifiCare determines are capable of
being cured, PacifiCare shall provide Medical Group with reasonable prior
written notice of not less than thirty (30) days specifying the Delegated
Activities which PacifiCare intends to revoke (the “revocation notice”).
PacifiCare shall specify in its revocation notice the corrective actions to be
taken by Medical Group to continue performance of Delegated Activities and the
timeframes within which such corrective actions must be completed (the “cure
period”). Promptly following the cure period, PacifiCare shall advise the
Medical Group, in writing, whether PacifiCare will proceed with revocation of
the Delegated Activities.

 

(b)           Deficiencies Not Capable of Cure.  For deficiencies which PacifiCare determines
are not capable of being cured, including but not limited to PacifiCare’s
determination that Medical Group’s continued performance of Delegated
Activities presents a risk of imminent harm to PacifiCare Members or would be
contrary to the requirements of any Government Agency, State or Federal Law or
Accreditation Standard, PacifiCare shall provide Medical Group with written
notice that the Delegated Activities shall be revoked by the effective date of
revocation.

 

(c)           Contents of Notices.  The written notices from PacifiCare to
Medical Group under this Section shall, where applicable, specify (i) the
adjustments to Capitation Payments as a result of the revocation of any
Delegated Activities in accordance with the allocations set forth in Section
5.2 of this Agreement, (ii) in the event that claims processing is revoked, the
adjustments to Capitation Payments for claims payment as set forth in Section
5.3 of this Agreement, and (iii) any and all changes to Exhibit 2 resulting
from revocation.

 

4.4.3        Continued Cooperation Following Revocation.  Upon revocation of any of the Delegated
Activities, or any portion thereof, PacifiCare will resume responsibility for
performing such activities, and Medical Group and its Participating Providers
shall continue to cooperate with PacifiCare with respect to the performance of
Managed Care Services.

 

23

 

4.4.4        Revocation Not Exclusive Remedy.  Notwithstanding PacifiCare’s right to revoke
the Delegated Activities, Medical Group’s failure to perform the Delegated
Activities shall be a breach of the Agreement. 
In such event, PacifiCare may exercise all of its other rights and
remedies to enforce the Agreement, including the right of termination.

 

4.4.5        Resumption of Delegated Activities.  Following the revocation of Delegated
Activities by PacifiCare, any resumption by Medical Group of responsibility for
Delegated Activities shall be pursuant to the provisions of Section 4.2.1,
above.

 

ARTICLE 5

COMPENSATION

 

5.1           Capitation Payments.  PacifiCare shall make monthly Capitation
Payments to Medical Group as payment for providing and arranging Covered
Services to Medical Group Members for each Managed Care Plan, as specified in
this Agreement and the applicable Product Attachment.

 

5.1.1        Due Date.  Each Capitation Payment shall be due and payable on the tenth
(10th) day of the month for the current month’s Covered Services.  In the event the tenth (10th) day of the month
is not a business day, the Capitation Payment shall be due and payable on the
next business day following the tenth (10th) day of the month.

 

5.1.2        Documentation.  PacifiCare shall provide Medical Group with documentation, as
specified in the Provider Manual, in support of each Capitation Payment.

 

5.1.3        Retroactive Adjustments.  Capitation Payments shall be subject to
retroactive adjustments either upward or downward due to retroactive changes in
the Premium for each Managed Care Plan as specified in the applicable Product
Attachment and retroactive changes in the number of Medical Group Members for
each Managed Care Plan.  Retroactive
adjustments to Capitation Payments for Medical Group Members enrolled in
Managed Care Plans which are government funded (including, without limitation,
Medicare, Medicaid, public employees) shall be made within ninety (90) days
after the adjustment is determined. 
Retroactive adjustments to Capitation Payments for Medical Group Members
enrolled in Managed Care Plans which are not government funded shall be made
within one hundred eighty (180) days after the end of the month for which the
Capitation Payment applies.

 

5.2           Payment for Performance of Delegated
Activities.  PacifiCare’s payment
for performance of the Delegated Activities by Medical Group is included in

 

24

 

Capitation Payments made to Medical Group.  The Capitation Payment rates set forth in each Product Attachment
assume that the Medical Group is fully delegated to perform Managed Care Program
Services.  Accordingly, for each month
in which any Delegated Activity is not delegated or has been revoked by
PacifiCare as provided at Article 4, the Medical Group’s Capitation Payment
shall be reduced by the following percentages:

 

	
  Activity Not Delegated

  	
   

  	
  Percentage

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Utilization Management

  	
   

  	
  4.0

  	
  %

  
	
  Credentialing

  	
   

  	
  0.5

  	
  %

  
	
  Claims Processing

  	
   

  	
  3,0

  	
  %

  

 

If only a portion of a specific Delegated Activity is delegated or
revoked, PacifiCare shall have the right to adjust percentages set forth above
to reflect the portion of the specific Delegated Activity performed by Medical
Group.  PacifiCare may modify the
payment for Delegated Activities effective at the beginning of any calendar
year by providing Medical Group with sixty (60) days’ prior written notice.

 

5.3           Withhold to Pay Claims.  If PacifiCare does not delegate performance
of claims processing to Medical Group or if the delegation of claims processing
is revoked by PacifiCare, PacifiCare shall deduct from Medical Group’s monthly
Capitation Payments an amount reasonably estimated by PacifiCare to be
necessary for PacifiCare to process and pay claims for Medical Group Services
which are not provided directly by Medical Group and its employed Participating
Providers.  Initially, this amount shall
initially be zero percent (0%) of premium of Medical Group’s monthly Capitation
Payment.  This amount may be increased
or decreased each month to more accurately reflect Medical Group’s actual and
expected claims experience and any changes in Covered Services which are
provided or arranged by Medical Group and its Participating Providers, with
adjustments for claims incurred but not received.

 

5.4           Incentive Programs.  Incentive programs are designed to ensure
that PacifiCare and Medical Group work collaboratively to deliver Covered
Services in an effective and efficient manner by ensuring appropriate
utilization of Covered Services. 
Incentive programs for each Managed Care Plan are set forth in the
applicable Product Attachment.

 

5.4.1        Incentive Program Withhold.  PacifiCare may establish and/or adjust a
withhold from Medical Group’s monthly Capitation Payment for purposes of
offsetting potential incentive program deficits.  PacifiCare shall provide full and complete data, of which shall
be in mutually agreeable data format and which calculations, including IBNR,
shall consistent with industry standards and accounting principles, which
demonstrates the basis of the withhold modification to the group prior

 

25

 

to any withhold modification. 
The group will have thirty (30) days to review and respond to the
data.  At no time will the Incentive
Program Withhold exceed the downside risk limit proposed, or any mutually
agreed upon limit.  The Incentive
Program Withhold shall be refunded to the Medical Group at the time of the
incentive program settlements, except that Medical Group’s share of any
incentive program deficits shall be deducted from such refund.  As of the date of this Agreement, it is
understood that the withhold for Secure Horizons is set at *** PMPM; and the
withhold for PacifiCare Commercial and Commercial POS is ***. Effective January
1, 2002, the withhold for PacifiCare Commercial and Commercial POS is set at
***.

 

5.4.2        Incentive Program Settlements.  PacifiCare shall conduct combined
settlements for all of the incentive programs for Managed Care Plans applicable
to Medical Group.  Surpluses and
deficits under each of the incentive programs shall be aggregated and offset
against one another.  PacifiCare will
conduct an estimated calculation after six (6) months (the “Interim
Calculation”) and a final calculation annually (the “Final Calculation”) based
on the calendar year.  The incentive
program withhold described above shall be refunded to the Medical Group at the
time of the incentive program settlements, except that Medical Group’s share of
any incentive program deficits shall be deducted from such refund.  Payments under the combined incentive
programs will be due from the owing party within one hundred and twenty (120)
days following the end of the six (6) months for the Interim Calculation and
within one hundred and eighty (180) days following the end of the calendar year
for the Final Calculation.  For the Interim
Calculation, the payment due will be limited to *** of the calculated amount
due to account for incurred but not received claims.  To the extent a Medical Group deficit has been carried forward
from a prior settlement period, this deficit shall be offset against amounts
due to Medical Group hereunder.  Medical
Group shall have thirty (30) days from the date of written notice to audit and
submit any revisions to the incentive program settlement to PacifiCare.  Any submitted revisions must be approved by
PacifiCare and such approval shall not be unreasonably withheld.  PacifiCare shall then have thirty (30) days
to make any necessary adjustment to the calculation and return the itemized
calculation to Medical Group, Such calculation shall be considered the final
calculation unless Medical Group and PacifiCare agree to extend the calculation
process, Any amounts owing shall be paid to the appropriate party within thirty
(30) days of the release of the final itemized calculation.  In the event that claims for providers were
incurred during the calendar year in question but were not paid until after the
final calculation, such costs shall be carried forward and applied to the
subsequent calendar year’s

 

26

 

incentive program as an expense for that calendar year.

 

5.4.3        Incentive Program Compliance with State and
Federal Law.  PacifiCare and Medical
Group acknowledge and agree that the payments which may be made directly or
indirectly under the incentive programs described in this Agreement are not made
as an inducement to reduce or limit Covered Services to any specific
Member.  Medical Group acknowledges and
agrees that any payments which may be made directly or indirectly under
physician incentive programs Medical Group may utilize with respect to its
Participating Providers shall not be made as an inducement to reduce or limit
Covered Services to any specific Member. 
Medical Group further acknowledges and agrees that the incentive
programs described in this Agreement shall be subject to modification by
PacifiCare during the term of this Agreement in order to comply with changes in
State and Federal Law, and Medical Group further agrees to modify any physician
incentive programs utilized with respect to its Participating Providers to
comply with such changes.

 

5.4.4        Limitation on Medical Group’s Risk.  In the event Medical Group incurs an
obligation under the overall incentive program settlement described above,
Medical Group shall not be responsible for reimbursing PacifiCare nor shall
PacifiCare offset the Medical Group’s obligation against Medical Group’s
Capitation Payments due under this Agreement. 
PacifiCare shall carry forward any Medical Group obligations as the
result of an incentive program obligation and the amount carried forward shall
be offset against amounts otherwise due to Medical Group under future
settlements for the combined incentive programs.  Notwithstanding the foregoing, Medical Group shall be responsible
for reimbursing PacifiCare for deficits in pharmacy incentive programs to the
extent there are insufficient surpluses due Medical Group from other incentive
programs to offset pharmacy deficits; such reimbursement shall be made within
thirty (30) days following completion of the Final Calculation for all
incentive program settlements described above.

 

5.5           Stop-Loss Program(s)

 

5.5.1        Individual Stop-Loss Program.  PacifiCare shall provide Individual
Stop-Loss (“ISL”) protection in order to limit Medical Group’s financial risk
for Medical Group Services (“ISL Program”) The TSL Program is designed to limit
Medical Group’s financial responsibility for Medical Group Services to a
specified dollar amount per Medical Group Member per calendar year (“ISL
Deductible”), while encouraging Medical Group’s continuing involvement with
Medical Group Member’s care by sharing a portion of the financial
responsibility for Medical Group Services which exceed the ISL

 

27

 

Deductible (“ISL Coinsurance”), PacifiCare shall charge a premium (“ISL
Premium”) as consideration for the ISL Program.  The ISL Deductible, ISL Coinsurance and ISL Premium for Medical
Group are specified in each Product Attachment.  Notwithstanding any other provision of this Agreement, PacifiCare
may amend the ISL Deductible, ISL Coinsurance and ISL Premium on an annual
basis effective at the beginning of any calendar year by providing sixty (60)
calendar days prior written notice to Medical Group.  For Medical Group Services which exceed the ISL Deductible,
PacifiCare will pay Cost of Care, less the Medical Group’s ISL Coinsurance
amount, subject to the Medical Group’s compliance with the procedures set forth
in the Provider Manual and the provisions of this Section set forth below.

 

5.5.2        Reinsurance Program.  PacifiCare shall provide reinsurance
protection (“Reinsurance Program”) in order to limit Medical Group’s financial
risk for Hospital Services under the Commercial Hospital Incentive Program and
Secure Horizons Hospital Incentive Program (the “Hospital Incentive Programs”),
when administered by PacifiCare, and to limit POS Out-of-Network risk under the
Commercial POS Control Program, to a specified dollar amount per Medical Group
Member per calendar year (the “Reinsurance Deductible”), while encouraging
Medical Group’s continuing involvement with Medical Group Member’s care by
sharing a portion of the financial responsibility for Hospital Services which
exceed the Reinsurance Deductible (“Reinsurance Coinsurance”). The Reinsurance
Deductible and Reinsurance Coinsurance for Medical Group are specified in each
Product Attachment.  Notwithstanding any
other provision of this Agreement, PacifiCare may amend the Reinsurance
Deductible and Reinsurance Coinsurance on an annual basis effective at the
beginning of any calendar year by providing sixty (60) calendar days’ prior
written notice to Medical Group.  For
Hospital Services which exceed the Reinsurance Deductible, the Reinsurance
Coinsurance shall be based on the Reinsurance Program as defined in the
applicable Product Attachment, subject to the Medical Group’s compliance with
the procedures set forth in the Provider Manual and the provisions set forth
below.

 

5.5.3        Submission of Claims.  Medical Group shall submit all claims under
the ISL Program and Reinsurance Program in accordance with the procedures set
forth in the Provider Manual. 
PacifiCare shall pay claims under the ISL Program and Reinsurance
Program only if such claims are submitted within one (1) year following the
date the claim is incurred.

 

5.5.4        Notification of Claims.  Medical Group shall provide written
notification to PacifiCare when Medical Group Services or Hospital

 

28

 

Services for any Medical Group Member(s) equal *** of the ISL
Deductible or *** of the Reinsurance Deductible, respectively.  Such written notification shall be provided
to PacifiCare no later than the fifteenth (15th) day of the month following the
month in which such threshold is reached. 
Medical Group acknowledges and agrees that if Medical Group fails to
provide the written notice required by this Section within the time frame
specified in this Section, Medical Group shall be financially responsible for
*** of all Medical Group Services or *** of all Hospital Services provided to
the Medical Group Member(s) in excess of the ISL Deductible or Reinsurance
Deductible, as applicable, which amount shall be in addition to the ISL
Coinsurance or Reinsurance Coinsurance, as applicable.

 

5.5.5        Opt Out from ISL and/or Reinsurance Program.  Subject to PacifiCare’s approval, Medical
Group may elect to opt out of the ISL Program or Reinsurance Program, effective
upon the Commencement Date or at the beginning of any calendar year.  In such event, Medical Group shall be required
to obtain ISL/reinsurance coverage from a third-party insurance carrier
acceptable to PacifiCare and in the amounts required by PacifiCare and State
and Federal Law.  In order to opt out of
PacifiCare’s ISL Program or Reinsurance Program, Medical Group must provide
written notice to PacifiCare at least thirty (30) days prior to the beginning
of the calendar year.  Such notice shall
specify the name of the third-party insurance carrier, and proposed effective
date, coverage levels and charges.  If
PacifiCare does not object to such coverage in writing within fifteen (15) days
of the date of the notice from Medical Group, Medical Group shall be required
to purchase such coverage as of the effective date specified in the notice.

 

Medical Group shall provide PacifiCare with a certificate of insurance
evidencing the stop-loss coverage as described in the Medical Group’s notice
within ten (10) days following the effective date of such insurance.  The certificate of insurance shall provide
that PacifiCare receive thirty (30) days’ prior written notice of cancellation
or material reduction in Medical Group’s ISL/reinsurance coverage.  If the Medical Group docs not purchase
coverage acceptable to PacifiCare or provide PacifiCare with evidence of the
ISL/reinsurance coverage as described herein, PacifiCare shall have the right
to provide the ISL/reinsurance protection at the deductible level determined by
PacifiCare to be appropriate for the Medical Group and shall deduct the
applicable ISL Premium from Medical Group’s Capitation Payments, or deduct the
applicable Reinsurance Premium from the Incentive Program Budget, as described
in the applicable Product Attachment. 
If PacifiCare approves Medical Group’s opt out of the Reinsurance
Program, PacifiCare will not be obligated to support the administration of a
third-party reinsurance program.

 

29

 

5.6           Payments Following Termination of this
Agreement.  Following termination of
this Agreement, PacifiCare shall make Capitation Payments to Medical Group as
compensation for providing and arranging Covered Services to remaining Medical
Group Members until such Members are assigned to other PacifiCare Participating
Providers.  For Members who are assigned
to other PacifiCare Participating Providers but who will continue to receive
certain ongoing services from Medical Group Participating Providers in
accordance with the provisions of Section 8.3 of this Agreement, Medical Group
shall be paid for such services at the Cost of Care or as otherwise agreed in
writing by Medical Group.

 

5.7           Cost of Care.  Certain provisions of this Agreement require
that Medical Group provide or arrange health care services which are not
covered by Capitation Payments at Cost of Care and certain provisions of this
Agreement require that Covered Services be valued at Cost of Care.  For purposes of this Agreement, “Cost of
Care” shall be calculated using the lesser of billed charges or in accordance
with the PacifiCare Fee Schedule.  The
PacifiCare Fee Schedule shall be based upon the following: (i) for professional
services that are included under the Medicare RBRVS Fee Schedule, reimbursement
shall be eighty-five percent (85%) of Medicare’s geographically adjusted fee
schedule according to the Medicare payment locality the provider resides in; (ii)
for all other health care services (other than inpatient and outpatient
Hospital Services) that are not included in RBRVS but included in a Medicare
Fee Schedule, reimbursement shall be one hundred percent (100%) of the Medicare
rate for the current period as released by HCFA by December of the preceding
year; (iii) for inpatient and outpatient Hospital Services, the Cost of Care
shall be the actual amounts paid by PacifiCare; (iv) for any other Covered
Services that do not fall within any of the above specified categories, (other
than inpatient and outpatient Hospital Services), reimbursement shall be the
lesser of fifty percent (50%) of billed charges or amount determined under
PacifiCare’s Fee Schedule.

 

5.8           Collection of Copayments.  Medical Group and its Participating
Providers shall be responsible for the collection of Copayments upon rendering
Medical Group Services to Medical Group Members in accordance with the
applicable Subscriber Agreement.  Any
Copayments which are stated as a percentage shall be calculated using the Cost
of Care for such Medical Group Services.

 

5.9           Collection of Charges from Third Parties.  If a Member is entitled to payment from a
third party (excluding a workers’ compensation carrier or primary insurance
carrier under applicable coordination of benefits rules), PacifiCare hereby
assigns to Medical Group for collection, any claims or demands against such
third parties for amounts due for Medical Group Services, subject to the
following conditions: (i) To the extent liens are utilized, Medical Group shall
utilize lien forms which are provided by PacifiCare or approved in

 

30

 

advance by PacifiCare; (ii) Medical Group shall notify PacifiCare each
time it pursues and each time it obtains a signed lien from a Member, (iii)
Medical Group shall not commence any legal action as it relates to this
Agreement against a third party without obtaining the prior written consent of
PacifiCare; and (iv) PacifiCare may immediately rescind the assignment of any
or all claims and demands against third parties by providing written notice of
rescission to Medical Group.

 

If Medical Group obtains ISL coverage from PacifiCare, the following
shall also apply:

 

(i)            Medical Group shall make no demand upon PacifiCare
for reimbursement under the ISL Program until all third-party claims have been
pursued and it is determined that full payment cannot be obtained within twelve
(12) months from the date of the provision of Medical Group Services; and

 

(ii)           In the event Medical Group receives payment
from a third party after receipt of an ISL payment from PacifiCare, Medical
Group shall reimburse PacifiCare to the extent that the combined amounts
received from all parties exceeds one hundred percent (100%) of Medical Group’s
usual and customary fee-for-service rates.

 

5.10         Coordination of Benefits.  Medical Group shall cooperate with and
support, as mutually agreed upon by the parties, PacifiCare’s coordination of
benefits rights.

 

5.10.1      Plan Is Primary.  If a Medical Group Member possesses health benefits coverage
through another policy which is secondary to PacifiCare under applicable
coordination of benefits rules, including the Medicare secondary payor program,
Medical Group shall accept payment from PacifiCare for Covered Services as
provided herein as full payment for such Covered Services, except for
applicable Copayments.  Medical Group
Member shall have no obligation for any fees, regardless of whether secondary
insurance is available.

 

5.10.2      Plan is Secondary.  If a Medical Group Member possesses health
benefits coverage through another policy which is primary to PacifiCare under
applicable coordination of benefits rules, including the Medicare secondary
payor program, or if Medical Group Member is entitled to payment under a
workers’ compensation policy or automobile insurance policy, Medical Group may
pursue payment from the primary payor or workers’ compensation carrier
consistent with applicable law and regulations and Medical Group’s contract, if
any, with the primary payor.  In such
event, PacifiCare’s responsibility shall equal the amount of out-of-pocket
expenses (i.e., Copayments,

 

31

 

coinsurance, and deductibles) that Medical Group Member would incur in
the absence of PacifiCare’s secondary coverage, minus the ISL Deductible and
ISL Coinsurance.

 

5.11         Recoupment Rights.  Except as may otherwise be specifically
provided in this Agreement, PacifiCare shall have the right to recoup any and
all amounts owed by Medical Group to PacifiCare against amounts, including
Capitation Payments, owed by PacifiCare to Medical Group.  Before exercising such right, PacifiCare
shall provide Medical Group with at least thirty (30) days’ prior written
notice specifying the amount to be recouped, and if PacifiCare receives payment
of such amount from Medical Group prior to the expiration of such thirty (30)
day period, such amount shall not be recouped. 
This right shall include, without limitation, PacifiCare’s right to recoup
the following amounts owed to PacifiCare by Medical Group: (i) amounts owed by
Medical Group due to overpayments or payments made in error by PacifiCare; (ii)
amounts owed by Medical Group as a result of claims for Medical Group Services
that PacifiCare may pay on behalf of Medical Group; (iii) amounts owed by
Medical Group as a result of the outcome of the Member appeals and grievance
procedure; (iv) amounts owed by Medical Group in connection with any other
prior or existing agreement between Medical Group and PacifiCare or any
PacifiCare Affiliate.  As a material
condition to PacifiCare’s obligations under this Agreement, Medical Group
agrees that all recoupment and any offset rights pursuant to this Agreement shall
be deemed to be and to constitute rights of recoupment authorized in State or
Federal law or in equity to the maximum extent possible under law or in equity
and that such rights shall not be subject to any requirement of prior or other
approval from any court or other government authority that may now or hereafter
have jurisdiction over Medical Group.

 

5.12         Adequacy of Compensation.  Medical Group agrees to accept payment as
provided herein as payment in full for providing and arranging the Covered
Services required under this Agreement, whether that amount is paid in whole or
in part by Member, PacifiCare or any Subscriber, including other health care
plans that pay before PacifiCare as required by applicable State or Federal
coordination of benefits provisions. 
This Section does not prohibit Medical Group from collecting applicable
Copayments, coinsurance or deductibles consistent with the Managed Care Plans.

 

5.13         Character of Payments from PacifiCare.  Capitation Payments to Medical Group
pursuant to this Agreement are for the primary purpose of compensating Medical
Group for the value of Medical Group Services provided pursuant to this
Agreement.  Medical Group shall assure
that claims and compensation for Medical Group Services provided or arranged
pursuant to this Agreement are paid from the Capitation Payments from
PacifiCare and from other funds available to Medical Group as may be necessary
for Medical Group to satisfy its financial obligations under this
Agreement.  Medical Group specifically agrees
that PacifiCare may exercise its recoupment rights as set forth above in the
event Medical Group fails to comply with the foregoing.

 

32

 

ARTICLE 6

TERM AND TERMINATION

 

6.1           Term.  The term of this Agreement shall commence on January 1, 2001 (the
“Commencement Date”) and end on December 31, 2002. Thereafter, the term of this
Agreement shall be automatically extended for twelve months on each January 1
(“Anniversary Date”), unless either party provides the other with written
notice of such party’s intention not to extend the term at least one hundred
twenty (120) calendar days prior to the Anniversary Date or until this
Agreement is appropriately terminated by either party as provided herein.

 

6.2           Deletion of Secure Horizons without Cause.  Notwithstanding the above, and only after
June 1, 2001, Product Attachment C, Secure Horizons Healthplan, may be deleted
in its entirety upon ninety (90) days prior written notice by either party.

 

6.3           Termination of Agreement with Cause.  Either PacifiCare or Medical Group may
terminate this Agreement for cause as set forth below, subject to the notice
requirement and cure period set forth below.

 

6.3.1        Cause for Termination of Agreement by
Medical Group.  The following shall
constitute cause for termination of this Agreement by Medical Group:

 

(i)            Non-Payment.  Failure by PacifiCare to pay Capitation
Payments due Medical Group hereunder within thirty (30) days of the Capitation
Payment due date or failure by PacifiCare to make any other payments due
Medical Group hereunder within forty-five (45) days of any such payment’s due
date.

 

(ii)           Breach of Material Term and Failure to
Cure.  PacifiCare’s breach of any
material term, covenant, or condition and subsequent failure to cure such
breach as provided below.

 

6.3.2        Cause for Termination of Agreement by
PacifiCare.  The following shall
constitute cause for termination of this Agreement by PacifiCare:

 

(i)            Financial Failure of Medical Group.  Insolvency of Medical Group.  Medical Group shall have the opportunity to
dispute such determination by PacifiCare by providing reasonable evidence and
assurances of financial stability and capacity to perform under this Agreement
within thirty (30) days of PacifiCare’s determination.

 

(ii)           Failure to Provide Quality Services.  Medical Group’s failure

 

33

 

to arrange or provide Covered Services in accordance with the standards
set forth in this Agreement and PacifiCare’s QI Program and UM Program.  Notwithstanding the foregoing, PacifiCare
reserves the right to immediately withdraw from Medical Group or any of its
Participating Providers any or all Members in the event the health or safety of
Members is endangered by the actions of Medical Group or any of its
Participating Providers or as a result of continuation of this Agreement.

 

(iii)          Change in Medicare Status.  Such time as Medical Group files an
affidavit with the Medicare Program promising to furnish Medicare covered
services to Medicare beneficiaries only through private contracts under Section
1802 (b) of the Social Security Act.

 

(iv)          Breach of Material Term and Failure to
Cure.  Medical Group’s breach of any
material term, covenant or condition of this Agreement and subsequent failure
to cure such breach as provided below.

 

6.3.3        Notice of Termination and Effective Date of
Termination.  The party asserting
cause for termination of this Agreement (the “terminating party”) shall provide
written notice of termination to the other party.  The notice of termination shall specify the breach or deficiency
underlying the cause for termination. 
The party receiving the written notice of termination shall have thirty
(30) calendar days from the receipt of such notice to cure the breach or deficiency
to the satisfaction of the terminating party (the “Cure Period”). If such party
fails to cure the breach or deficiency to the satisfaction of the terminating
party within the Cure Period or if the breach or deficiency is not curable, the
terminating party shall provide written notice of failure to cure the breach or
deficiency to the other party following expiration of the Cure Period.  This Agreement shall terminate upon receipt
of the written notice of failure to cure or at such other date as may be
specified in such notice.  During the Cure
Period, PacifiCare may cease marketing efforts for Medical Group, discontinue
enrollment of Members with Medical Group and begin transferring Medical Group
Members to other PacifiCare Participating Providers.

 

6.4           Automatic Termination Upon Revocation of
License or Certificate.  This
Agreement shall automatically terminate upon the revocation, suspension or
restriction of any license, certificate or other authority required to be
maintained by Medical Group or PacifiCare in order to perform the services
required under this Agreement or upon the Medical Group’s or PacifiCare’s
failure to obtain such license, certificate or authority.

 

34

 

6.5           Termination for Transfer to a Successor
Entity.  As set forth in Section
7.11, PacifiCare shall have the right to terminate this Agreement on ninety
(90) days’ prior written notice to Medical Group if PacifiCare reasonably
determines that any successor entity or management company, as defined in
Section 7.11, cannot satisfactorily perform the obligations of Medical Group
under this Agreement or that PacifiCare prefers not to do business with the
successor entity or management company.

 

6.6           Transfer of Medical Records.  Following termination of this Agreement, at
PacifiCare’s request, Medical Group and its Participating Providers shall copy
all requested Medical Group Member patient medical files in the possession of
Medical Group or its Participating Providers and forward such files to another
provider of Covered Services designated by PacifiCare, provided such copying
and forwarding is not otherwise objected to by such Members.  The copies of such medical files may be in
summary form.  The cost of copying the
patient medical files shall be borne by Medical Group if Medical Group
terminates this Agreement or by PacifiCare if PacifiCare terminates this
Agreement.  Medical Group shall
cooperate with PacifiCare in maintaining the confidentiality of such Member
medical records at all times

 

6.7           Repayment Upon Termination.  Within one hundred eighty (180) calendar
days of the effective date of termination of this Agreement, an accounting
shall be made by PacifiCare of the monies due and owing either party and
payment shall be forthcoming by the appropriate party to settle such balance
within thirty (30) calendar days of such accounting.  Either party may request an independent audit of such PacifiCare
accounting by a mutually acceptable independent certified public accountant and
such audit shall be equally paid for by both parties.  The parties agree to abide by the findings of such independent
audit.  Appropriate payment, if any, by
the appropriate party shall be made within thirty (30) calendar days of such
independent audit.

 

6.8           Termination Not an Exclusive Remedy.  Any termination by either party pursuant to
this Article is not meant as an exclusive remedy and such terminating party may
seek whatever action in law or equity as may be necessary to enforce its rights
under this Agreement.

 

ARTICLE 7

GENERAL PROVISIONS

 

7.1           Independent, Contractor Relationship.  The relationship between PacifiCare and
Medical Group is an independent contractor relationship.  Neither Medical Group nor its Participating
Providers, employees or agents are employees or agents of PacifiCare and
neither PacifiCare nor its employees or agents are members, partners, employees
or agents of Medical Group.  None of the
provisions of this Agreement shall be construed to create a relationship

 

35

 

of agency, representation, joint venture, ownership, control or
employment between the parties other than that of independent parties
contracting solely for the purpose of effectuating this Agreement.  Nothing contained in this Agreement shall
cause either party to be liable or responsible for any debt, liability or
obligation of the other party or any third party unless such liability or
responsibility is expressly assumed by the party sought to be charged
therewith.

 

7.2           Responsibility For Own Acts.  Each party shall be responsible for its own
acts or omissions and for any and all claims, liabilities, injuries, suits,
demands and expenses of all kinds which may result or arise out of any alleged
malfeasance or neglect caused or alleged to have been caused by that party or
its employees or representatives in the performance or omission of any act or
responsibility of that party under this Agreement.

 

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

 

7.4           Disputes Between Medical Group or its
Participating Providers and Member. 
Any controversies or claims between Medical Group or its Participating
Providers and a Member arising out of the performance of this Agreement by
Medical Group or the Medical Group’s Participating Provider, other than claims
for benefits under Managed Care Plans, are not governed by this Agreement.  Medical Group or its Participating Provider
and the Member may seek any appropriate legal action to resolve such
controversy or claim deemed necessary.

 

7.5           Disputes Between PacifiCare and Medical
Group

 

7.5.1        Dispute Resolution Procedure. 
PacifiCare has established a Provider

 

36

 

Dispute Resolution Procedure, set forth in the Provider Manual, to
provide a mechanism by which PacifiCare’s Participating Providers, including
Medical Group and any of its Participating Providers, may submit to PacifiCare
certain disputes arising out of the performance of this Agreement or relating
to the decisions made by PacifiCare under this Agreement for resolution on an
informal basis.  Any dispute submitted
pursuant to the Provider Dispute Resolution Procedure should be addressed to
the appropriate PacifiCare person(s) or department(s) at the address and/or
telephone number identified in the Provider Manual.  Any provider dispute which is not resolved informally through the
Provider Dispute Resolution Procedure may be submitted for arbitration as
provided in Section 7.5.2 below.

 

7.5.2        Arbitration.  Any controversy, dispute or claim arising out of the
interpretation, performance or breach of this Agreement which is not resolved
pursuant to the Provider Dispute Resolution Procedure specified above shall be
resolved by binding arbitration at the request of either party, in accordance
with the Commercial Rules of the American Arbitration Association.  Such arbitration shall occur in Los Angeles,
California, unless the parties mutually agree to have such proceeding in some
other locale.  The arbitrators shall
apply California substantive law and Federal substantive law where State law is
preempted.  Civil discovery for use in
such arbitration may be conducted in accordance with the provisions of
California law, and the arbitrator(s) selected shall have the power to enforce
the rights, remedies, duties, liabilities and obligations of discovery by the
imposition of the same terms, conditions and penalties as can be imposed in
like circumstances in a civil action by a court of competent jurisdiction of
the State of California.  The provisions
of California law concerning the right to discovery and the use of depositions
in arbitration are incorporated herein by reference and made applicable to this
Agreement.

 

The arbitrators shall have the power to grant all legal and equitable
remedies and award compensatory damages provided by California law, except that
punitive damages shall not be awarded. 
The arbitrators shall prepare in writing and provide to the parties an
award including factual findings and the legal reasons on which the award is
based.  The arbitrators shall not have
the power to commit errors of law or legal reasoning.

 

Notwithstanding the above, in the event either Medical Group or
PacifiCare wishes to obtain injunctive relief or a temporary restraining order,
such party may initiate an action for such relief in a court of general jurisdiction
in the State of California.  The
decision of the court with respect to the requested injunctive relief or
temporary

 

37

 

restraining order shall be subject to appeal only as allowed under
California law.  However, the courts
shall not have the authority to review or grant any request or demand for
damages.

 

7.6           Notice.  All notices required or permitted by this Agreement shall be in
writing and may be delivered in person or may be sent by registered or
certified mail or U.S. Postal Service Express Mail, with postage prepaid, or by
Federal Express or other overnight courier that guarantees next day delivery,
or by facsimile transmission, and shall be deemed sufficiently given if served
in the manner specified in this Section. 
The addresses below shall be the particular party’s address for delivery
or mailing of notice purposes:

 

If
to PacifiCare:

 

PacifiCare of California

10833 Valley View Street

Cypress, CA 90630-5015

Attn: Vice President

 

If to Medical Group:

 

Prospect Medical Group

1920 East 17th Street, Ste 200

Santa Ana, CA 92705-8626

Attn: Vice President

 

The parties may change the names and addresses noted above through
written notice in compliance with this Section.  Any notice sent by registered or certified mail, return receipt
requested, shall be deemed given on the date of delivery shown on the receipt
card, or if no delivery date is shown, the postmark date.  Notices delivered by U.S. Postal Service Express
mail, Federal Express or overnight courier that guarantees next day delivery
shall be deemed given twenty-four (24) hours after delivery of the notice to
the United States Postal Service, Federal Express or overnight courier.  If any notice is transmitted by facsimile
transmission or similar means, the notice shall be deemed served or delivered
upon telephone confirmation of receipt of the transmission, provided a copy is
also delivered via delivery or mail.

 

7.7           Assignment.  This Agreement and the rights, interests and benefits hereunder
shall not be assigned, transferred or pledged in any way by Medical Group or
PacifiCare and shall not be subject to execution, attachment or similar
process.  However, PacifiCare may assign
this Agreement and its rights, interests and benefits hereunder to any entity
which is a corporate affiliate of PacifiCare.

 

38

 

7.8           Amendments

 

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

 

7.8.2        Amendments to Provider Manual.  PacifiCare may amend the Provider Manual by
providing thirty (30) calendar days’ prior written notice to Medical
Group.  Such amendments shall be binding
upon Medical Group at the end of the thirty (30) calendar-day period.  Medical Group shall be bound by such
amendment unless (i) Medical Group provides PacifiCare with notice of objection
within the thirty (30) calendar-day notice period, (ii) such change is not made
in order to comply with a change in State or Federal Law, (iii) such change is
not made in order to address a change in PacifiCare’s Managed Care Plans, (iv)
such change affects a material duty or responsibility of Medical Group, and (v)
the change has a material adverse economic effect upon Medical Group as
reasonably demonstrated by Medical Group to PacifiCare.  In such event, Medical Group and PacifiCare
shall seek to agree to an amendment to this Agreement which satisfactorily
addresses the effect on Medical Group’s material duty or responsibility and
reimburses the material economic detriment caused to Medical Group.  In such event, the amendment to the Provider
Manual shall not be effective until the parties amend the Agreement through a
written amendment signed by both parties.

 

7.8.3        Amendments to Agreement 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.

 

7.8.4        Amendments to Managed Care Plans.  PacifiCare may amend or change any or all
provisions of the Managed Care Plans by providing thirty (30) calendar days’
prior written notice to Medical Group. 
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.

 

7.9           Confidential and Proprietary Information

 

7.9.1        Information Confidential and Proprietary to
PacifiCare.  Medical Group and its
Participating Providers shall maintain confidential all information designated
in this Section.  The information which

 

39

 

Medical Group and its Participating Providers shall maintain
confidential (the “Confidential Information”) consists of: (i) the Eligibility
List and any other information containing the names, addresses and telephone
numbers of Members which has been compiled by PacifiCare; (ii) lists or
documents compiled by PacifiCare which include the names, addresses and
telephone numbers of employers, employees of such employers responsible for
health benefits and the officers and directors of such employers; (iii)
PacifiCare’s Provider Manual and any of PacifiCare’s member, employer and
administrative service manuals and all forms related thereto; (iv) the
financial arrangements between PacifiCare and any of PacifiCare’s Participating
Providers; (v) PacifiCare underwriting and rating information and any other
information utilized by PacifiCare for determining eligibility or rates for the
Managed Care Plans; and (vi) any other information compiled or created by
PacifiCare which is proprietary to PacifiCare and which PacifiCare identifies
in writing to Medical Group.

 

7.9.2        Non-Disclosure of Confidential Information.  Medical Group and its Participating
Providers shall not disclose or use the Confidential Information for their own
benefit or gain either during the term of this Agreement or after the date of
termination of this Agreement.  Medical
Group and its Participating Providers may use the Confidential Information to
the extent necessary to perform their duties under this Agreement or upon
express prior written permission of PacifiCare.  Upon the effective date of termination of this Agreement, Medical
Group and its Participating Providers shall provide and return to PacifiCare
the Confidential Information in their possession in the manner specified by
PacifiCare.

 

7.9.3        Information Confidential and Proprietary to
Medical Group.  Medical Group shall
provide PacifiCare with a written description of all information proprietary to
Medical Group which is confidential or contains trade secrets of Medical Group
(the “Medical Group Information”). PacifiCare shall maintain and shall
cooperate with Medical Group to maintain the confidentiality of Medical Group
Information.  PacifiCare shall not
disclose or use any Medical Group Information for its own benefit either during
the term of this Agreement or after the effective date of termination of this
Agreement.  Upon termination of this
Agreement, PacifiCare shall provide and return to Medical Group all Medical
Group Information in its possession in the manner to be specified by Medical
Group.

 

7.9.4        PacifiCare Names, Logos and Service Marks.  Medical Group shall obtain the written
consent of PacifiCare prior to using PacifiCare’s name, product names, logos
and service marks in any of Medical

 

40

 

Group’s promotional, marketing or advertising materials or for any
other reason.

 

7.10         Solicitation of PacifiCare Members or
Subscriber Groups.  Medical Group
and its Participating Providers shall not engage in the practice of
solicitation of Members, Subscribers and Subscriber Groups without PacifiCare’s
prior written consent.  Solicitation
shall mean conduct by an officer, agent, employee of Medical Group or its
Participating Providers or their respective assignees or successors during the
term of this Agreement and continuing for a period of six (6) months after the
effective date of termination of this Agreement which may be reasonably
interpreted as designed to persuade Members, Subscribers or Subscriber Groups
to disenroll from any Managed Care Plan or discontinue their relationship with
PacifiCare.  Notwithstanding any other
provision of this Agreement, Medical Group agrees that PacifiCare shall, in
addition to any other remedies provided for under this Agreement, have the
right to seek a judicial temporary restraining order, preliminary injunction,
or other equitable relief against Medical Group and its Participating Providers
to enforce its rights under this Section. 
Nothing in this Agreement shall be interpreted to discourage or prohibit
Medical Group and its Participating Providers from discussing a Member’s health
care including, without limitation, communications regarding treatment options,
alternative plans or other coverage arrangements, unless such communications
are for the primary purpose of securing financial gain.

 

7.11         Notification and Approval of Sale or Change
in Management of Medical Group. 
Medical Group agrees that it shall provide prior written notice to
PacifiCare of its intent to either (i) sell, transfer or convey its business or
any substantial portion of its business assets to another entity (“successor
entity”) or (ii) enter into a management contract with a physician practice
management company (“management company”) which does not manage Medical Group
as of the Commencement Date.  Such prior
written notice shall be given at least one hundred twenty (120) days prior to
Medical Group selling its business or entering into such contract.  As set forth in Section 6.4, PacifiCare
shall have the right to terminate this Agreement upon one hundred twenty (120)
days’ written notice to Medical Group if PacifiCare reasonably determines that
any successor entity or any management company cannot satisfactorily perform
the obligations of Medical Group under this Agreement or that PacifiCare
prefers not to do business with the successor entity or management
company.  Medical Group warrants and assures
that this Agreement, if not otherwise terminated by PacifiCare, will be assumed
by all successor entities and that all successor entities and management
companies will be bound by the terms and conditions of this Agreement.

 

7.12         Confidentiality of this Agreement.  To the extent reasonably possible, each
party agrees to maintain this Agreement as a confidential document and not to
disclose the Agreement or any of its terms without the approval of the other party.

 

41

 

 

7.13         Invalidity of Sections of Agreement.  The unenforceability or invalidity of any
paragraph or subparagraph of any section or subsection of this Agreement shall
not affect the enforceability and validity of the balance of this Agreement.

 

7.14         Captions.  Captions in this Agreement are descriptive only and do not affect
the intent or interpretation of the Agreement.

 

7.15         Waiver of Breach.  The waiver by either party to this Agreement
of a breach or violation of any provision of this Agreement shall not operate
as or be construed to be a waiver of any subsequent breach or violation
thereof.

 

7.16         Medical Group’s Authorized Representative.  Unless otherwise indicated in writing to
PacifiCare, Medical Group warrants and authorizes its administrator to act as
its fully authorized representative to represent Medical Group in this
Agreement and to receive any and all communications and notices hereunder.

 

7.17         No Third Party Beneficiaries. 
This Agreement shall not create any rights in any third parties who have
not entered into this Agreement, nor shall this Agreement entitle any such
third party to enforce any rights or obligations that may be possessed by such
third party.

 

7.18         Entire Agreement.  This Agreement, including all exhibits,
attachments and amendments hereto, contains all the terms and conditions agreed
upon by the parties regarding the subject matter of this Agreement.  Any prior agreements, promises, negotiations
or representations of or between the parties, either oral or written, relating
to the subject matter of this Agreement, which are not expressly set forth in
this Agreement are null and void and of no further force or effect.

 

7.19         Applicable Federal Laws.  The compensation payable to Medical Group
pursuant to this Agreement consists of federal funds; accordingly, Medical
Group acknowledges that it will be required to comply with certain laws
applicable to entities and individuals receiving federal funds.

 

7.20         Incorporation of Exhibits, Attachments and
Provider Manual.  The exhibits and
attachments to this Agreement and the Provider Manual are an integral part of
this Agreement and are incorporated in full herein by this reference.

 

ARTICLE 8

GOVERNING LAW AMD REGULATORY REQUIREMENTS

 

8.1       Governing Law.  This Agreement and the rights and obligations of the parties hereunder
shall be construed, interpreted, and enforced in accordance with,

 

42

 

and governed by, the laws of the State of California and the United
States of America, including, without limitation, the Knox-Keene Health Care
Service Plan Act of 1975, as amended, and the regulations adopted thereunder by
the California Department of Corporations, the federal Health Maintenance
Organization Act of 1973, as amended, and the regulations adopted thereunder by
the United States Department of Health and Human Services.  Any provisions required to be in this
Agreement by State and Federal Law or by Government Agencies shall bind
PacifiCare and Medical Group whether or not expressly provided in this
Agreement.

 

8.2           No Billing of Members (Member Hold
Harmless Provision). With the exception of Copayments and charges for
non-Covered Services delivered on a fee-for-service basis to Members, Medical
Group and its Participating Providers shall in no event, including, without limitation,
non-payment by PacifiCare, insolvency of PacifiCare, or breach of this
Agreement, bill, charge, collect a deposit from, seek compensation or
remuneration or reimbursement from, or have any recourse against any Member or
any person (other than PacifiCare) acting on behalf on any Member or attempt to
do any of the foregoing for Covered Services provided or arranged pursuant to
this Agreement.

 

Medical Group and its Participating Providers shall not maintain any
action at law or equity against a Member to collect sums owed by PacifiCare to
Medical Group.  Upon notice of any such
action, PacifiCare may terminate this Agreement as provided above and take all
other appropriate action consistent with the terms of this Agreement to
eliminate such charges, including, without limitation, requiring Medical Group
and its Participating Providers to return all sums collected as surcharges from
Members or their representatives.  For
purposes of this Agreement, “Surcharges” are additional fees for Covered
Services which are not disclosed to Members in the Subscriber Agreement and/or
Evidence of Coverage, are not allowable Copayments and are not authorized by
this Agreement.  Nothing in this
Agreement shall be construed to prevent Medical Group from providing non-Covered
Services on a usual and customary fee-for-service basis to Members

 

Medical Group and its Participating Providers’ obligations under this
Section shall survive the termination of this Agreement with respect to Covered
Services provided or arranged during or after the term of this Agreement,
regardless of the cause giving rise to such termination, and this Section shall
be construed to be for the benefit of Members. 
This Section supersedes any oral or written contrary agreement now
existing or hereafter entered into between Medical Group and any Member or a
person acting on behalf of any Member.

 

Any modification, additions, or deletions to the provisions of this
Section shall be effective only following any required notice to HCFA or other
applicable Government Agency.

 

43

 

 

8.3           Continuing Care
Obligations of Medical Group.

 

8.3.1        General Obligations.  In the event of termination of this
Agreement for any reason, Medical Group and its Participating Providers shall
continue to provide or arrange Covered Services to Members, including any
Members who become eligible during the termination notice period, beginning on
the effective date of termination and continuing until the later of (a) twelve
(12) months following the effective date of termination of this Agreement, (b)
December 31 of the then current calendar year, or (c) the expiration of the
period in which Medical Group is obligated to arrange or provide Covered
Services in Special Circumstances as provided at Section 8.3.3 below.  Notwithstanding the foregoing, with respect
to Members for whom PacifiCare arranges for a transfer to another PacifiCare
Participating Provider and provides written notice to Medical Group of such
transfer, this Agreement shall cease to apply for such Members, as of the
effective date of such Member’s transfer. 
In addition to the foregoing, Medical Group and its Participating
Providers will continue to provide or arrange Covered Services to any Members
who cannot be transferred within the time period specified above in accordance
with PacifiCare’s legal and contractual obligations to (i) provide Covered
Services under the Managed Care Plans and Subscriber Agreement and/or Evidence
of Coverage, (ii) provide notice of termination to Members and (iii) ensure
continuity of care for its Members.

 

8.3.2        Obligations if PacifiCare Ceases Operating
or Termination of Agreement for Nonpayment.  Notwithstanding any other provisions of this Agreement, Medical
Group agrees that in the event PacifiCare ceases operations for any reason,
including insolvency, Medical Group and its Participating Providers shall
provide or arrange Covered Services and shall not bill, charge, collect or
receive any form of payment from any Member for Covered Services provided after
PacifiCare ceases operations.  Such
obligation shall be for the period for which Premium has been paid, but shall
not exceed a period of thirty (30) calendar days, except for those Members who
are hospitalized on an inpatient basis as provided below.

 

In the event PacifiCare ceases operations or Medical Group terminates
this Agreement on the basis of PacifiCare’s failure to make timely Capitation
Payments, Medical Group and its Participating Providers shall continue to
provide or arrange for Covered Services to those Members who are hospitalized
on an inpatient basis at the time PacifiCare ceases operations or Medical Group
terminates this

 

44

 

Agreement until such Members are discharged from the hospital.  Practitioner shall not bill, charge, collect
or receive any form of payment from any Member for such Covered Services.

 

8.3.3        Obligations to Continue to Provide Covered
Services in Special Circumstances.

 

(a)           Definitions.  For the purposes of this Section 8.3.3, the
terms set forth below shall have the following meanings:

 

(i)            “Covered Services in Special Circumstances”
shall mean Covered Services provided by a Medical Group Participating Provider
following termination to a Member who is undergoing a course of treatment from
the Participating Provider for an acute condition, serious chronic condition,
high-risk pregnancy, or a pregnancy that has reached the second or third
trimester at the time of termination. 
The foregoing definition shall be interpreted in a manner consistent
with applicable law, including California Health and Safety Code Section
1373.96.

 

(ii)           “Termination” or “terminated,” as used in
this Section 8.3.3, shall mean (i) any circumstance which terminates,
non-renews or otherwise ends the arrangement by which a Participating Provider
provides Covered Services to Members or (ii) termination of this Agreement.

 

(iii)          “Participating Provider,” as used in this
Section 8.3.3, shall be limited to persons who are physicians, podiatrists,
clinical psychologists, dentists, and chiropractors, as applicable.

 

(b)           Notifications Regarding Termination.  Medical Group shall provide advance written
notice to PacifiCare of the impending termination of a Participating Provider
in accordance with Section 2.3.3 of this Agreement.  Additionally, Medical Group and the Participating Provider shall
identify to PacifiCare, in writing, any Members who are receiving treatment
from the Participating Provider for an acute condition or serious chronic condition,
high-risk pregnancy or pregnancy in the second or third trimester at the time
of such written notice and on the effective date of termination.  In the event of termination of this
Agreement, Medical Group shall provide information to PacifiCare to identify
Members who may be eligible for

 

45

 

Covered Services in Special Circumstances from a Medical Group
Participating Provider.

 

(c)           Termination of Participating Provider.  Following the termination of any Medical
Group 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 to Members as required by this Section 8.3.3.

 

(d)           Termination of this Agreement.  Following termination of this Agreement,
Medical Group shall, at the request of the applicable Member and in accordance
with PacifiCare’s policies and procedures, assure that all of its Participating
Providers shall provide Covered Services in Special Circumstances to Members as
required by this Section 8.3.3.

 

(e)           Exceptions.  Medical Group is not obligated to arrange for its Participating
Provider(s) to provide Covered Services in Special Circumstances to Members if
the terminated Participating Provider (i) was terminated for a medical
disciplinary cause or reason, fraud or other criminal activity, (ii)
voluntarily terminated his or her agreement with Medical Group, (iii) does not
agree to comply or does not comply with the same terms and conditions set forth
in the terminated Participating Provider’s subcontract with Medical Group in
providing Covered Services in Special Circumstances, 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 or does not otherwise accept payment rates for such services
similar to rates and methods of payment used by Medical Group for its
contracted providers providing similar services who are not capitated and who
are practicing in the same or a similar geographic area as the terminated
Participating Provider.

 

(f)            Time Periods for Provision of Covered
Services in Special Circumstances.

 

(i)            In the case of a Member who has an acute
condition or serious chronic condition, the Covered Services in Special
Circumstances shall be provided to the Member by the terminated Participating
Provider for up to ninety

 

46

 

(90) days following the termination date or a longer period if
necessary for a safe transfer to another Participating Provider as determined
by Medical Group in consultation with the terminated Participating Provider.

 

(ii)           In the case of a Member who has a high-risk
pregnancy or a pregnancy that has reached the second or third trimester, the
Covered Services in Special Circumstances shall be provided to the Member by
the terminated Participating Provider until postpartum services related to the
delivery are completed or for a longer period if necessary for a safe transfer
to another Participating Provider as determined by Medical Group in consultation
with the terminated Participating Provider.

 

(g)           Compensation of Medical Group
Participating Providers.  Medical
Group shall be solely responsible for compensating any terminated Participating
Provider for the provision of Covered Services in Special Circumstances to
Members as agreed upon in writing between the terminated Participating Provider
and Medical Group 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 a similar geographic area as the
terminated Participating Provider.

 

8.3.4        Survival of Provisions following Termination.  Medical Group agrees that the provisions of
this Section and the obligations of Medical Group and its Participating
Providers herein shall survive termination of this Agreement regardless of the
cause giving rise to such termination, and shall be construed to be for the
benefit of Members.

 

8.3.5        Services to be Provided to Members
Transferred to Medical Group from a Terminated Participating Provider.  Subject to Medical Group’s capacity to
accept additional Members, Medical Group agrees to accept transfers of Members
from other Participating Providers in circumstances in which such Participating
Provider’s agreement with PacifiCare has terminated.  Upon such transfer, Medical Group agrees that it shall accept
prior authorizations for Covered Services provided to such Members and shall be
financially responsible for all continuing Covered Services to be provided or
arranged for such transferred Members following termination of the other
Participating Provider’s agreement with PacifiCare.  PacifiCare agrees that to the best of their ability, any services
to be provided to Members transferred to Medical Group from a terminated
Participating Provider shall be coordinated with Medical Groups Medical
Director or designee.  Medical Group
will review authorizations for appropriateness and will redirect, where

 

47

 

medically appropriate and in accordance with PacifiCare’s Continuity of
Care Policy, to Medical Group Participating Providers.

 

8.4           Inspection and Audit of Records and
Facilities.  Medical Group and its Participating
Providers shall provide access at reasonable times upon demand by PacifiCare,
Accreditation Organizations and Government Agencies to periodically audit or
inspect the facilities, offices, equipment, books, documents and records of
Medical Group and its Participating Providers relating to the performance of
this Agreement and the Covered Services provided to Members, including, without
limitation, all phases of professional and ancillary medical care provided or
arranged for Members by Medical Group and its Participating Providers, Member
medical records and financial records pertaining to the cost of operations and
income received by Medical Group for Covered Services rendered to Members.  Medical Group and its Participating
Providers shall comply with any requirements or directives issued by PacifiCare,
Accreditation Organizations and Government Agencies as a result of such
evaluation, inspection or audit of Medical Group and its Participating
Providers.  Medical Group and its
Participating Providers shall retain the books and records described in this
Section for at least six (6) years and acknowledge that certain Government
Agencies may have the right to inspect and audit Medical Group’s books and
records following termination of this Agreement.  Without limiting the foregoing, following the commencement of any
audit by a Government Agency, Medical Group shall retain its relevant books and
records until completion of said audit. 
The provisions of this Section shall survive termination of this
Agreement for the period of time required by State and Federal Law.

 

8.5           Nondiscrimination.  Medical Group assures that Covered Services
shall be provided to Members in the same manner as such services are provided
to other patients of Medical Group and its Participating Providers, except as
required pursuant to this Agreement. 
Medical Group and its Participating Providers shall not unlawfully
discriminate against any Member on the basis of source of payment or in any
manner in regards to access to, and the provision of, Covered Services.  Medical Group and its Participating
Providers shall not unlawfully discriminate against any Member, employee or
applicant for employment on the basis of race, religion, color, national
origin, ancestry, physical handicap, medical condition, marital status, age or
sex.

 

ARTICLE 9

EXPRESS REFERRALS

 

9.1           Additional Defined Terms.  The capitalized terms used in this Article
9, which are not otherwise defined herein, shall have the meanings ascribed to
them in the Agreement.

 

9.1.1        Express Referrals is the name of the
program established by PacifiCare

 

48

 

for streamlined referrals of
Medical Group Members from Primary Care Physicians to specialists in Express
Referrals Specialties.

 

9.1.2        Express Referrals Provider is any
PacifiCare Participating Provider that offers Express Referrals.

 

9.1.3        Express Referrals Specialties include,
but are not limited to, the following specialties: Cardiology, Dermatology,
Endocrinology, Ear, Nose and Throat, Gastroenterology, General Surgery,
Hematology, Neurology, Obstetrics/Gynecology, Oncology, Ophthalmology,
Orthopedic Surgery, Podiatry, Routine Lab, Routine X-Ray, and Urology.  PacifiCare may modify the list of Express
Referrals Specialties at any time upon at least ninety (90) days’ prior written
notice to Medical Group.

 

9.2           Duties of Medical Group

 

9.2.1        Establish Streamlined Referral Process.  Medical Group shall establish a streamlined
referral process, through which any Primary Care Physician who deems that a
referral to a specialist in any Express Referrals Speciality for any Member is
necessary, may refer the Member to Medical Group’s Participating Providers
specializing in such Express Referrals Speciality without the prior
authorization of the Medical Group or the Medical Group’s utilization review
committee.  The Medical Group must,
however, continue to track all referrals. 
If, for any reason, Medical Group fails to maintain a streamlined
referral process which meets all of the requirements of Express Referrals,
Medical Group shall provide immediate written notice thereof to PacifiCare
Medical Group’s failure to so notify PacifiCare that it is no longer
maintaining standards in compliance with Express Referrals shall be a material
breach of the Agreement, subjecting Medical Group to all of the remedies
contemplated thereby.

 

9.2.2        Access to Records.  Medical Group will provide PacifiCare with
any and all necessary information including medical records, policies and
procedures, utilization review procedures and reports and other related information
necessary, in order for PacifiCare to verify that Medical Group has a
streamlined referral process which meets the requirements of Express Referrals
in a manner acceptable to PacifiCare.

 

9.2.3        Marketing Activities.  Medical Group agrees to participate in
PacifiCare’s marketing activities to promote Express Referrals and to promote
the Medical Group as an Express Referrals Provider.

 

49

 

9.3           Duties of PacifiCare

 

9.3.1        Marketing Activities.  PacifiCare shall engage in marketing
activities to promote Express Referrals, including identifying Medical Group as
an Express Referrals Provider in PacifiCare’s Provider Directory.

 

9.3.2        Determination of Compliance by Medical Group.  PacifiCare reserves the right to determine
whether Medical Group is in compliance with the terms of this Article 9 and the
requirements of Express Referrals.  If
PacifiCare determines that Medical Group is not properly maintaining a
streamlined referral process in compliance with the requirements of Express
Referrals, PacifiCare shall cease marketing Medical Group as an Express
Referrals Provider, and any future marketing of Medical Group as an Express
Referrals Provider will be at the sole discretion of PacifiCare.

 

9.4           Termination.  The provisions of this Article 9 may be
terminated by PacifiCare at any time upon ninety (90) days’ prior written
notice to Medical Group.

 

 

50

 

 

IN WITNESS
WHEREOF, the parties hereto have executed this Agreement in Orange County,
California.

 

	
   

  	
  PACIFICARE
  OF CALIFORNIA

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Brian
  Jeffrey

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  Vice
  President

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
  6/20/01

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  MEDICAL
  GROUP

  Prospect Medical Group

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Peter G.
  Goll

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  Senior Vice
  President

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
  5-16-01

  	
   

  
						

 

51

 

PACIFICARE OF CALIFORNIA

 

MEDICAL GROUP/IPA SERVICES AGREEMENT

(PROFESSIONAL CAPITATION)

 

EXHIBIT 1

 

MEDICAL GROUP FACILITIES AND SERVICE AREA

(This Exhibit 1 is an integral part of this Agreement)

 

Medical Group Facilities:

 

Prior to the
Commencement Date, Medical Group shall provide PacifiCare with a list of all
Medical Group Facilities.

 

Facilities
shall also include each facility at which a Medical Group Participating Provider
routinely provides services pursuant to this Agreement.

 

All Medical
Group Facilities shall, in accordance with PacifiCare’s policies and
procedures, be subject to PacifiCare’s prior written approval.

 

Hospital(s):

•              Placentia
Linda Community Medical Center

•              United
Western Medical Center

•              Irvine
Medical Center

•              Downey
Regional Medical Center

•              Los
Alamitos Medical Center

 

Medical Group Service Area:

 

The Medical
Group Service Area is the geographic area within a thirty (30) mile radius of
each of the Medical Group Facilities, excluding the offices of specialists as
approved by PacifiCare in writing.  The
Medical Group Service Area shall be determined by PacifiCare, based upon the
shortest route using public streets and highways.

 

52

 

PACIFICARE OF CALIFORNIA

 

MEDICAL GROUP/IPA SERVICES AGREEMENT

(PROFESSIONAL CAPITATION)

 

EXHIBIT 2

DELEGATED ACTIVITIES

(This Exhibit 2 is an integral part of this Agreement)

 

The purpose of
the following Grids is to specify the responsibilities of PacifiCare and
Medical Group under the Agreement with respect to: (i) claims processing and
payment, (ii) credentialing and recredentialing, (iii) medical records, (iv)
quality management and improvement and (v) utilization management.

 

The Grids set
forth the specific activities with respect to (i) claims processing and
payment, (ii) credentialing and recredentialing, (iii) medical records, (iv)
quality management and improvement and (v) utilization management, which
PacifiCare has delegated to Medical Group and which Medical Group shall perform
on behalf of PacifiCare.  The Grids also
set forth the specific activities with respect to: (i) claims processing and
payment, (ii) credentialing and recredentialing, (iii) medical records, (iv)
quality management and improvement and (v) utilization management, which
PacifiCare has not delegated to Medical Group under the Agreement and which
PacifiCare shall perform directly utilizing its own personnel.  Medical Group is responsible for cooperating,
participating and complying with PacifiCare’s performance of such activities.

 

PacifiCare
does not formally delegate to its contracting medical groups the responsibility
for performing quality management and improvement activities on behalf of PacifiCare.  However, PacifiCare does require contracting
medical groups to maintain a quality improvement and management program,
participate and cooperate in PacifiCare’s quality improvement program, collect
data for PacifiCare’s quality improvement activities, and carry out corrective
actions as required by PacifiCare. 
Accordingly, the Grids set forth certain quality improvement activities
which PacifiCare has not delegated to Medical Group to perform on behalf of PacifiCare,
but which PacifiCare and Medical Group shall perform concurrently under the
Agreement.  PacifiCare also does not
formally delegate to contracting medical groups the responsibility for
performing member services.  However,
PacifiCare does require contracting medical groups under the Agreement to
participate, cooperate and comply with PacifiCare’s activities relating to
member services, preventive health services, and medical record reviews as
required by PacifiCare.

 

The Grids also
identify (i) the elements and performance measures established by PacifiCare
for the Delegated Activities in accordance with the NCQA accreditation
standards and State and Federal law and regulatory requirements, (ii) the
reports

 

53

 

which shall be
provided to PacifiCare by Medical Group for each of the Delegated Activities
and the frequency of reporting, and (iii) the oversight activities which
PacifiCare shall perform with respect to each of the Delegated Activities.

 

Exhibit 2 may
be amended from time to time during the term of this Agreement by PacifiCare to
reflect changes in delegation standards; delegation status; performance
measures; reporting requirements; and other provisions of Exhibit 2.

 

54

 

CLAIMS DELEGATION GRID

 

	
  Function

  	
   

  	
  Delegation

  Status

  	
   

  	
  Medical
  Group Responsibility/

  Performance Measure

  	
   

  	
  Reporting

  Frequency

  	
   

  	
  PacifiCare
  Oversight

  
	
  HCFA Regulations

  	
   

  	
  Delegated

  	
   

  	
  Compliance with all HCFA regulations &
  guidelines for claims processing and payment including:

  •    Claims payment turnaround
  lines

  •    Appropriate reimbursement
  for contracted and non-contracted providers

  •    Interest payments

  •    Denials/denial letters

  •    BBA regulations

  •    Provider reporting

  •    Y2K compliance

  	
   

  	
  Monthly

  	
   

  	
  •    Initial onsite assessment utilizing
  approved oversight tool. 

  •    Annual oversight assessment utilizing
  approved oversight tool. 

  •    Additional onsite reviews as warranted by
  the plan utilizing approved oversight tool.

  •    Implementation of Corrective Action Plan(s)
  for elements of non-compliance.

  
	
  PacifiCare
  Standards for Commercial Products

  	
   

  	
  Delegated

  	
   

  	
  Compliance
  with PacifiCare’s standards for processing and payment of claims for
  Commercial Products including:

  •    Claims payment turnaround
  times

  •    Appropriate reimbursement
  for contracted and non-contracted providers

  •    Interest payments

  •    Denials/denial letters

  •    Provider reporting

  •    Appropriate IBNR reserves

  	
   

  	
  Monthly

  	
   

  	
  •    Initial onsite assessment
  utilizing approved oversight tool.

  •    Annual oversight assessment utilizing approved
  oversight tool.

  •    Additional onsite reviews as warranted by the
  plan utilizing approved oversight tool.

  •    Implementation of Corrective Action Plan(s) for
  elements of non-compliance.

  
	
  State
  Regulations

  	
   

  	
  Delegated

  	
   

  	
  Compliance
  with State Regulations for claims processing:

  •    COB and TPL review

  •    Compliance with all Medicaid
  Regulations

  	
   

  	
  N/A

  	
   

  	
  •    Initial onsite assessment
  utilizing approved oversight tool.

  •    Annual oversight assessment utilizing approved
  oversight tool.

  •    Additional onsite reviews as warranted by the
  plan utilizing approved oversight tool.

  •    Implementation of Corrective Action Plan(s) for
  elements of non-compliance.

  
	
  OPM
  Requirements

  	
   

  	
  Delegated

  	
   

  	
  Compliance
  with Office of Personnel Management for Federal Employees requirements for
  claims processing and payment including:

  •    COB identification

  •    Debarred providers suspended

  	
   

  	
  N/A

  	
   

  	
   

  
	
  Standards
  for Employer Performance Guarantees

  	
   

  	
  Delegated

  	
   

  	
  Meet
  Employer performance guarantee measurements for claims processing and
  payment.

  	
   

  	
  As required by employer

  	
   

  	
  •    Initial onsite assessment
  utilizing approved oversight tool.

  •    Annual oversight assessment
  utilizing approved oversight tool.

  •    Additional onsite reviews as
  warranted by the plan utilizing approved oversight tool.

  •    Implementation of Corrective
  Action Plan(s) for elements of non-compliance.

  
	
  Eligibility
  and Benefits

  	
   

  	
  Not
  Delegated

  	
   

  	
  Medical
  Group must:

  Verify eligibility at time of claim review

  •    Update eligibility and
  benefit information in their system as often as communicated by the plan.

  	
   

  	
  N/A

  	
   

  	
  •    Initial onsite assessment utilizing
  approved oversight tool.

  •    Annual oversight assessment utilizing approved
  oversight tool.

  •    Additional onsite reviews as warranted by the
  plan utilizing approved oversight tool.

  •    Implementation of Corrective Action Plan(s) for
  elements of non-compliance.

  
	
  Financial
  Accounting

  	
   

  	
  Delegated

  	
   

  	
  Meets
  PacifiCare financial accounting requirements and solvency requirements
  including those for:

  •    Financial statements

  •    IBNR reserves

  •    Processes for expense
  reduction

  	
   

  	
  Annually

  	
   

  	
  •    Initial onsite assessment
  utilizing approved oversight tool.

  •    Annual oversight assessment utilizing approved
  oversight tool.

  •    Additional onsite reviews as warranted by the
  plan utilizing approved oversight tool.

   

  

 

55

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  •    Implementation of Corrective Action Plan(s) for
  elements of non-compliance.

  
	
  Check
  Production Processes

  	
   

  	
  Delegated

  	
   

  	
  Compliance
  with timely claims payments and IRS requirements including:

  •    Check production processes

  •    Performing Provider Satisfaction Survey

  •    Process to settle claims in collections

  •    1099 production processes

  	
   

  	
  N/A

  	
   

  	
  •    Initial onsite assessment
  utilizing approved oversight tool.

  •    Annual oversight assessment utilizing approved
  oversight tool.

  •    Additional onsite reviews as warranted by the
  plan utilizing approved oversight tool.

  •    Implementation of Corrective Action Plan(s) for
  elements of non-compliance.

  
	
  Staffing

  	
   

  	
  Delegated

  	
   

  	
  Staffing
  sufficient to support claims volume and processing timeliness requirements
  including:

  •    Staffing levels

  •    Customer Service capabilities

  •    Past experience for claims resolution

  •    Staff available to answer claims questions during
  normal hours of operation

  	
   

  	
  N/A

  	
   

  	
  •    Initial onsite assessment
  utilizing approved oversight tool.

  •    Annual oversight assessment utilizing approved
  oversight tool.

  •    Additional onsite reviews as warranted by the
  plan utilizing approved oversight tool.

  •    Implementation of Corrective Action Plan(s) for
  elements of non-compliance.

  
	
  Audit
  Reporting

  	
   

  	
  Delegated

  	
   

  	
  Appropriate
  and adequate audit reporting available including:

  •    Reports provided for audit

  	
   

  	
  As needed
  for audits

  	
   

  	
  •    Initial onsite assessment
  utilizing approved oversight tool.

  •    Annual oversight assessment utilizing approved
  oversight tool.

  •    Additional onsite reviews as warranted by the
  plan utilizing approved oversight tool.

  •    Implementation of Corrective Action Plan(s) for
  elements of non-compliance.

  
	
  Encounter
  Data

  	
   

  	
  Delegated

  	
   

  	
  The Medical
  Group must have an encounter data submission process with encounter data
  reported and submitted to PacifiCare monthly

  	
   

  	
  Monthly

  	
   

  	
  •    Initial onsite assessment
  utilizing approved oversight tool.

  •    Annual oversight assessment utilizing approved
  oversight tool.

  •    Additional onsite reviews as warranted by the
  plan utilizing approved oversight tool.

  •    Implementation of Corrective Action Plan(s) for
  elements of non-compliance.

  

 

PacifiCare’s responsibilities relating to
Claims and those responsibilities which PacifiCare has delegated to the Medical
Group, are outlined above.

 

The
Medical Group agrees to be accountable for all responsibilities delegated by
PacifiCare and will not further delegate any such responsibilities without
prior written approval by PacifiCare.

 

PacifiCare
will perform audits annually and as needed to evaluate the group’s delegated
status.  In the event there are
deficiencies identified in the audit, PacifiCare will provide a specific
corrective action plan.  If the group is
not able to comply with the corrective action plan within the specified time
frame, PacifiCare may revoke the group’s delegated status.

 

56

 

CREDENTIALING DELEGATION GRID

 

	
  Function

  	
   

  	
  Delegation

  Status

  	
   

  	
  Medical
  Group Responsibility/

  Performance Measure

  	
   

  	
  Reporting

  Frequency

  	
   

  	
  PacifiCare
  Oversight

  
	
  Credentialing
  Policies and Procedures

  	
   

  	
  Delegated

  	
   

  	
  Full
  Compliance with NCQA Standards:

  •    Identify scope

  •    Define criteria and verification of criteria

  •    Describe decision making process, including how
  advice is received from participating practitioners

  •    Describe extent of any delegated credentialing/recredentialing
  arrangements

  •    Describe right of practitioner to review
  information.

  •    Develop process to notify practitioner of
  discrepancies.

  •    Include practitioner’s right to correct erroneous
  information.

  •    Ensure confidentiality.

  •    Define Medical Director responsibilities and
  participation.

  	
   

  	
  Submit
  Credentialing Program annually.

  

  

  Revised credentialing policies and procedures submitted
  quarterly, if applicable.

  	
   

  	
  •    Initial onsite assessment

  •    Annual oversight assessment

  •    Annual PacifiCare Committee approval

  •    Evaluate and approve written Credentialing
  Program

  •    Implementation of Corrective

  •    Action Plan(s) for elements of non-compliance

  
	
  Credentialing
  Committee

  	
   

  	
  Delegated

  	
   

  	
  Full
  Compliance with NCQA Standards:

  •    The MG Designates a credentialing committee or
  other review body that makes recommendations regarding credentialing
  decisions

  	
   

  	
  Annual
  credentialing program to include committee structure.

  	
   

  	
  •    Initial onsite assessment

  •    Annual oversight assessment

  •    Annual PacifiCare Committee approval

  •    Annual Review of Committee minutes

  •    Annual review of membership

  •    Frequency of meetings

  •    Implementation of Corrective Action Plan(s) for
  elements of non-compliance

  
	
  Primary source verification of
  credentialing information

  	
   

  	
  Delegated

  	
   

  	
  Full compliance with NCQA Standards
  regarding verification of information within 180 days of Committee approval
  date.

  Meet 90% of all NCQA credentialing
  standards (exempt from primary source verification of license).

  Meet 100% of NCQA standards related to
  primary source verification of licenser.

  •    Primary source verification to include.

  •    License

  •    Clinical privileges

  •    DEA/CDS

  •    Education

  •    Board certification

  •    Work history

  •    Malpractice insurance

  •    Professional liability claims

  	
   

  	
  Submit current list of physicians
  credentialed and recredentialed with quarterly report.

  	
   

  	
  •    Initial onsite assessment

  •    Annual oversight assessment

  •    Annual PacifiCare Committee approval

  •    Implementation of Corrective Action Plan(s) for
  elements of non-compliance

  •    Audit conducted of provider credentialing and
  recredentialing files (5% or 50 credentialing files reviewed, whichever is
  less, with a minimum of 10 credentialing and 10 recredentialing files
  reviewed).

  
	
  Application/
  Attestation

  	
   

  	
  Delegated

  	
   

  	
  Full
  compliance with NCQA Standards:

  The PMG/IPA application
  must include a statement regarding:

  •    Reasons for any inability to perform.

  •    Lack of present illegal drug use

  •    History of loss of license of felony conviction.

  •    History of loss or limitation of

   

  	
   

  	
  Immediate
  submission of any changes to application

  	
   

  	
  •    Initial onsite assessment

  •    Annual oversight assessment

  •    Annual PacifiCare Committee approval.

  •    Annual review of credentialing files (5% or 50
  credentialing files reviewed, whichever is less, with a minimum of 10
  credentialing and 10 recredentialing files.

  •    Implementation of Corrective Action Plan(s) for
  element of

   

  

 

57

 

	
   

  	
   

  	
   

  	
   

  	
  privileges or disciplinary activity.

  •    Attestation by applicant of the correctness and
  completeness of the application.

  •    Signed within 180 days of Committee approval
  date.

  	
   

  	
   

  	
   

  	
  non-compliance

  
	
  National
  Practitioner Data Base (NPDB) Information/ Sanction Information

  	
   

  	
  Delegated

  	
   

  	
  Full
  compliance with NCQA Standards regarding verification of information within
  180 days of Committee Approval date.

  For all
  Medicare and/or Medicaid sanctions as appropriate

  •    State Board of Dental Examiners

  •    State Board of Pediatric Examiners

  •    State Board of Medical Examiners

  •    Federation of State Medical Boards or Department
  of Professional Regulations

  •    State Board of Chiropractic Examiners of the
  Federation of Chiropractic Licensing Boards

  	
   

  	
  NONE

  	
   

  	
  •    Initial onsite assessment

  •    Annual oversight assessment

  •    Annual PacifiCare Committee approval

  •    Implementation of Corrective Action Plan(s) for
  elements of non-compliance

  
	
  Initial
  office visit of all PCPs and OB/GYNs and medical record keeping review

  	
   

  	
  Delegated

  	
   

  	
  Full
  compliance with NCQA Standards regarding Initial site visit/medical record
  review and subsequent biannual site visit/medical record review.

  Structure
  review that evaluates the office site against standards in the following
  areas:

  •    Physical accessibility

  •    Physical appearance

  •    Adequacy of waiting room and exam room space

  •    Availability of appointments vs. expected
  performance standards

  •    Documentation of an evaluation of medical record
  keeping practices for conformity with standards

  •    Incorporation of this information into the
  credentialing process

  	
   

  	
  Include list
  of all initial site reviews completed on an annual basis.

  	
   

  	
  •    Initial onsite assessment

  •    Annual oversight assessment

  •    Annual PacifiCare Committee approval

  •    Biannual site review

  •    Biannual medical record review

  •    Implementation of Corrective Action Plan(s) for
  elements of non-compliance

  •    Annual review of audit tool

  •    Verification of all sites completed within 2
  years prior to initial credentialing

  •    Review of credential files annually as above to
  include evidence of initial site review and record keeping review.

  
	
  Recredentialing

  Primary
  source verification (PSV)

  	
   

  	
  Delegated

  	
   

  	
  Meet 90% of
  all NCQA Recredentialing standards (except PSV of Licenser).

  Meet 100% of
  NCQA Standards related to PSV of Licenser.

  Recredentialing
  to include:

  License, clinical privileges, DEA/ CDS, Boards Certification,
  Malpractice Insurance, Professional Liability claims, signed Attestation
  regarding any inability to perform and lack of present illegal drug use.

  	
   

  	
  Include list
  of all providers recredentialed on quarterly basis (with quarterly report)

  	
   

  	
  •    Annual audit files of 5% or random sample of 50
  to represent entire contracted network

  •    Annual onsite assessment

  
	
  Recredentialing
  National Practitioner Data Base (NPDB) information/

  Sanction
  information

  	
   

  	
  Delegated

  	
   

  	
  Full
  compliance with NCQA Recredentialing Standards regarding verification of
  information within 180 days of Committee approval date

  Recredentialing
  conducted biannually by the Provider.

  Recredentialing
  must be completed

   

  	
   

  	
   

  	
   

  	
  •    Initial onsite assessment

  •    Annual oversight assessment

  •    Annual PacifiCare Committee approval

  •    Implementation of Corrective Action Plan(s) for
  elements of non-compliance

  •    Annual audit of files of 5% or random sample of
  50 to represent 

  

 

58

 

	
   

  	
   

  	
   

  	
   

  	
  Within 24
  months of prior credentialing or recredentialing activity

   

  Recredentialing
  information found in credentialing files includes the following:

  •    Information from NPDB

  •    Sanction information, as appropriate:

  •    State Board of Medical Examiners, Federation of
  State Medical Boards

  •    Department of Professional Regulations

  •    State Board of Chiropractic Examiners on the
  Federation of Chiropractic Licensing Boards

  •    State Board of Dental Examiners

  •    For all providers: review of Medicare/Medicaid
  sanctions.

  	
   

  	
   

  	
   

  	
  the entire
  contracted network to include sanction information

  
	
  Incorporation
  of the following data in the Recredentialing decision-making process:

  •    Member complaints

  •    QI activities

  •    UM

  •    Member Satisfaction

  •    MCO uses performance monitoring in the
  recredentialing of PCPs.

  	
   

  	
  Delegated

  	
   

  	
  Full
  compliance with NCQA Recredentialing Standards.

  Recredentialing
  conducted biannually by the Provider.

  Recredentialing
  must be completed within 24 months of prior credentialing or recredentialing
  activity.

  Incorporate
  the following information into the recredentialing decision making process
  for PCPs:

  •    Member complaints

  •    Information from quality improvement activities

  •    Member satisfaction

  •    Site visits conducted

  	
   

  	
  List of all
  recredentialing site reviews completed on an annual basis

  	
   

  	
  •    Initial onsite assessment

  •    Annual oversight assessment

  •    Annual PacifiCare Committee approval

  •    Implementation of Corrective Action Plan(s) for
  elements of non-compliance

  •    Annual review of audit tool

  •    Verification of all sites completed within 2
  years prior to recredentialing

  •    Review of files annually includes verification or
  recredentialing site visit

  
	
  Site Visits

  	
   

  	
  Delegated

  	
   

  	
  Full
  compliance with NCQA Standards regarding biannual recredentialing site
  visit/medical record review.

  Visit to
  office of all PCP sites with 50 or more members within 2 years prior to Recredentialing.

  Review
  office vs. standards in areas listed under PSV section and documented
  evaluation of medical record keeping practices.

  	
   

  	
  List of all
  recredentialing site reviews completed on an annual basis

  	
   

  	
  •    Initial onsite assessment

  •    Annual oversight assessment

  •    Annual PacifiCare committee approval

  •    Biannual Site Review

  •    Biannual Medical Record Review

  •    Implementation of Corrective Action Plan(s) for
  elements of non-compliance

  •    Annual review of audit tool

  •    Verification of all sites completed within 2
  years prior to recredentialing

  •    Review of files annually includes verification of
  recredentialing site visit

  
	
  Peer Review/
  Disciplinary Action

  	
   

  	
  Delegated

  	
   

  	
  Full
  compliance with NCQA Standards Policy and Procedures (P&Ps) for reporting
  of quality deficiencies.

  P&Ps for
  range of action to be taken to improve performance prior to termination.

  P&Ps to
  describe appeals process.

  P&Ps for
  altering the conditions of the

  	
   

  	
  New P&Ps
  submitted quarterly

  	
   

  	
  •    Initial onsite assessment

  •    Annual oversight assessment

  •    Annual PacifiCare committee approval

  •    Implementation of Corrective Action Plans(s) for
  elements of non-compliance

  

 

59

 

	
   

  	
   

  	
   

  	
   

  	
  practitioner’s
  Participation with PacifiCare based on quality of care of service.

  	
   

  	
   

  	
   

  	
   

  
	
  Assessment
  of Organizational Providers (hospitals, home health agencies, SNFs, and
  free-standing surgical centers)

  	
   

  	
  Delegated

  	
   

  	
  For
  subcontracted acute care hospitals, home health agencies, SNFs, and
  free-standing surgical centers:

  1.   Confirms
  good standing with state and Federal regulatory bodies; and

  2.   Confirms
  accreditation; or

  3.   If
  not accredited, develops standards of participation and reviews for
  compliance; and

  4.   At
  least every three years, confirms continued good standing of regulatory bodies,
  and if applicable, accreditation

  	
   

  	
  Submit list
  of subcontracted organizational providers on an annual basis 

  	
   

  	
  •    Annual assessment including
  P&Ps and random pull of files; two in each of the four categories;
  one accredited, one non-accredited as applicable.

  
	
  Sub-Delegation
  of Credentialing

  	
   

  	
  Delegated

  	
   

  	
  If MG
  sub-delegates Credentialing to a CVO, Hospital, IPA, etc:

  1.   Detailed
  documentation of delegation agreement

  2.   Initial
  evaluation

  3.   Annual
  evaluation, including file review

  4.   MG
  retains right to approve/ disapprove new providers and to discipline
  providers

  	
   

  	
  Submit
  copies of sub-delegation agreements to PacifiCare on an annual basis

  	
   

  	
  •    Annual assessment of
  sub-delegation process agreements, and polices and procedures.

  

 

PacifiCare’s
responsibilities relating to Credentialing and those responsibilities, which
PacifiCare has delegated to the Medical Group, are outlined above.

 

The
Medical Group agrees to be accountable for all responsibilities delegated by
PacifiCare and will not further delegate any such responsibilities without the
prior approval by PacifiCare.

 

PacifiCare
will perform audits annually and as needed to evaluate the group’s delegated
status.  In the event there are
deficiencies identified in the audit, PacifiCare will provide a specific corrective
action plan.  If the group is not able
to comply with the corrective action plan within the specified time frame,
PacifiCare may revoke the group’s delegate status.

 

60

 

MEDICAL RECORDS DELEGATION GRID

 

	
  Function

  	
   

  	
  Delegation Status

  	
   

  	
  Medical Group

  Responsibility/

  Performance Measure

  	
   

  	
  Reporting Frequency

  	
   

  	
  PacifiCare Oversight

  
	
  Systematic
  Review and Action

  	
   

  	
  Delegated

  	
   

  	
  •    Audit medical records from at least 90% of
  all primary care practice sites with 50 members or more, and 2 years
  participation in the Medical Group.

  •    Audit tool to include all elements required
  by NCQA and PacifiCare.

  •    Trend results by practice-site and
  organization-wide.  Identify
  opportunities for improvement, describe interventions, and assess subsequent
  performance.

  	
   

  	
  Annual
  submission of medical records review workplan.

  

  At least twice a year report at a minimum: the number of physicians whose
  medical records were reviewed; any practice-specific or organization-wide
  actions taken for improvement; and the results of those actions.

  	
   

  	
  •    Quality Improvement Committee or their
  designee reviews and approves Annual Workplan and monitoring report.

  •    Audit Medical Group’s policies and
  processes on an annual basis to include 5% or 50 worksheets to ensure
  conformance to standards and note deficiencies identified.  Facilitate and monitor Medical Group’s
  compliance with work plan and corrective action plans.

  •    Site visit assessments correlates with
  review of medical records

  

 

PacifiCare’s
responsibilities relating to Medical Records and those responsibilities, which
PacifiCare has delegated to the Medical Group, are outlined above.

 

The
Medical Group agrees to be accountable for all responsibilities delegated by
PacifiCare and will not further delegate any such responsibilities without the
approval by PacifiCare.

 

PacifiCare
will perform audits annually and as needed to evaluate the group’s delegated
status.  In the event there are
deficiencies identified in the audit, PacifiCare will provide a specific
corrective action plan.  If the group is
not able to comply with the corrective action plan within the specified time
frame, PacifiCare may revoke the group’s delegated status.

 

61

 

QUALITY IMPROVEMENT DELEGATION GRID

 

	
  Function

  	
   

  	
  Delegation

  Status

  	
   

  	
  Medical
  Group Responsibility/

  Performance Measure

  	
   

  	
  Reporting
  Frequency

  	
   

  	
  PacifiCare
  Oversight

  
	
  Program
  Structure

  	
   

  	
  Not
  Delegated

  	
   

  	
  Medical
  Group is required to maintain the following:

  •    QM Program

  •    Structure to carry out Quality Mgmt.  Program

  •    QM Program outlining structure and content

  •    Program description must be evaluated annually
  and updated as necessary

  	
   

  	
   

  	
   

  	
   

  
	
  Program
  Operations

  	
   

  	
  Not
  Delegated

  	
   

  	
  •    Participate and cooperate in PacifiCare’s Quality
  Improvement program

  •    Collect data for PacifiCare’s Quality Improvement
  Activities

  •    Carry out corrective actions required by
  PacifiCare

  •    Have a peer review process

  •    Participate in PacifiCare Quality Improvement
  Committee, (if requested)

  •    Provide PacifiCare access to Medical Records

  •    Identify barriers to improving key ininatives

  •    Implement interventions

  •    Comply with PacifiCare’s confidentiality
  standards

  	
   

  	
   

  	
   

  	
   

  

 

PacifiCare
does not formally delegate to its contracting Medical Groups the responsibility
for performing quality management and improvement activities on behalf of
PacifiCare.

 

62

 

UTILIZATION MANAGEMENT DELEGATION GRID

 

	
  Function

  	
   

  	
  Delegation

  Status

  	
   

  	
  PacifiCare Responsibility

  	
   

  	
  Medical Group Responsibility/

  Performance Measure

  	
   

  	
  Reporting

  Frequency

  	
   

  	
  PacifiCare

  Oversight

  
	
  Prior
  Authorization

  	
   

  	
  Delegated

  	
   

  	
  •    Responsible for ensuring eligibility and benefits
  appropriately followed.

  •    Responsible for ensuring appropriate structure,
  standards and Policies and Procedures followed.

  	
   

  	
  For prior
  authorization Medical Group (MG) must:

  •    Comply with PacifiCare’s Turn Around Times

  •    Follow PacifiCare’s approved medical necessity
  criteria

  •    Develop and document program to perform prior
  authorization function of OP and IP care meeting all regulatory and
  PacifiCare standards

  	
   

  	
  Weekly
  submission of authorization/denial logs

  •    Monthly submission of encounter data

  	
   

  	
  •    Pre-delegation onsite assessment to determine
  ability to perform function

  •    Annual onsite assessment to determine ability to
  perform function

  
	
  Concurrent
  Review

  	
   

  	
  Delegated

  	
   

  	
  •    Responsible for ensuring eligibility and benefits
  appropriately followed.

  •    Responsible for ensuring appropriate structure,
  standards and Policies and Procedures followed.

  	
   

  	
  For concurrent review MG must:

  •    Comply with PacifiCare’s Turn Around Times

  •    Follow PacifiCare’s approved medical necessity
  criteria

  •    Develop and document programs to perform
  concurrent review of acute and Skilled Nursing Facility inpatients meeting
  all regulatory and PacifiCare standards

  	
   

  	
  •    Daily submission of inpatient census

  •    Monthly submission of Bed Days per thousand
  members per year

  	
   

  	
  •    Pre-delegation onsite assessment to determine
  ability to perform function

  •    Annual onsite assessment to determine ability to
  perform function

  
	
  Discharge
  Planning

  	
   

  	
  Delegated

  	
   

  	
  •    Responsible for ensuring benefits appropriately
  followed.

  •    Responsible for ensuring appropriate structure,
  standards and Policies and Procedures followed

  	
   

  	
  Develop and
  document program to perform discharge planning functions for Acute and
  Skilled Nursing Facility meeting all regulatory and PacifiCare standards

  	
   

  	
   

  	
   

  	
  •    Pre-delegation onsite assessment to determine
  ability to perform function

  •    Annual onsite assessment to determine ability to
  perform function

  
	
  Out Of Area
  (OOA)

  	
   

  	
  Delegated

  	
   

  	
  •    If Group NOT delegated, responsible for
  concurrent review, authorization of services

  •    PacifiCare responsible to report OOA cases to
  Group, and coordinate with Group returning patient to network providers

  •    If Group is delegated responsible for ensuring
  eligibility and benefits appropriately followed.

  •    Responsible for ensuring appropriate structure,
  standards and Policies and Procedures followed.

  	
   

  	
  Develop and
  document program to perform OOA concurrent review meeting all regulatory and
  PacifiCare Standards

  	
   

  	
  If Group
  delegated should be included in weekly authorization/denial log submission

  	
   

  	
  •    Pre-delegation onsite assessment to determine
  ability to perform function

  •    Annual onsite assessment to determine ability to
  perform function

  
	
  Case Management

  	
   

  	
  Delegated

  	
   

  	
  •    Responsible for ensuring eligibility and benefits
  appropriately followed

  •    Responsible for ensuring appropriate structure,
  standards and Policies and Procedures followed

  •    If NOT delegated, responsible for performing Case
  Management functions

  	
   

  	
  Develop and
  document program to perform Case Management function meeting all regulatory
  and PacifiCare standards 

  If NOT
  delegated, responsible to coordinate care with PacifiCare Case Managers

  	
   

  	
  Monthly
  submission of Case Management Log

  	
   

  	
  •    Pre-delegation onsite assessment to determine
  ability to perform function

  •    Annual onsite assessment to determine ability to
  perform function

  

 

63

 

	
   

  	
   

  	
   

  	
   

  	
  and coordinating care with Group

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Transplants

  	
   

  	
  Delegated

  	
   

  	
  •    Responsible for ensuring eligibility and benefits
  appropriately followed.

  •    Responsible for ensuring appropriate structure,
  standards, and Policies and Procedures followed.

  •    If not delegated to MG, responsible for providing
  medical necessity determination to MG and notification of status for pending
  transplants.

  	
   

  	
  Develop and
  document case management program to include transplants.

  •    Required to case manage these cases if delegated.

  •    If not delegated, responsible to provide
  PacifiCare with all necessary information to make medical determination.

  	
   

  	
  Monthly
  submission of transplant cases

  	
   

  	
  •    Pre-delegation onsite assessment to determine
  ability to perform function.

  •    Annual onsite assessment to determine ability to
  perform function

  
	
  New
  Technology

  	
   

  	
  Delegated

  	
   

  	
  •    Responsible for ensuring eligibility and benefits
  for new technology, and new uses for existing technology.

  •    Medical case review for determining
  appropriateness and medical necessity

  •    Technology Assessment Committee will develop
  guidelines to support new technology and new uses for existing technology.

  	
   

  	
  Develop and
  document Policies and Procedures to support notification to PacifiCare of
  requests for new technology and coordination of making determinations.

  	
   

  	
  Ad Hoc

  	
   

  	
  •    Pre-delegation onsite assessment to determine
  ability to perform function.

  •    Annual onsite assessment to determine ability to
  perform function.

  
	
  Retroactive-review

  	
   

  	
  Delegated

  	
   

  	
  •    Responsible for ensuring eligibility and benefits
  appropriately followed.

  •    Responsible for ensuring appropriate structure,
  standards and Policies and Procedures followed.

  	
   

  	
  For
  Retroactive-review MG must:

  •    Comply with PacifiCare’s Turn Around Times

  •    Follow PacifiCare’s approved medical necessity
  criteria

  •    Develop and document program to perform
  retrospective review function.

  	
   

  	
  Weekly
  submission of authorization/denial logs

  	
   

  	
  •    Pre-delegation onsite assessment to determine
  ability to perform function.

  •    Annual onsite assessment to determine ability to
  perform function

  
	
  Denials

  	
   

  	
  Delegated

  	
   

  	
  •    Responsible for ensuring eligibility and benefits
  appropriately followed.

  •    Responsible for ensuring appropriate structure,
  standards and Policies and Procedures followed.

  	
   

  	
  For Denials MG must:

  •    Comply with PacifiCare’s Turn Around Times

  •    Follow PacifiCare’s approved medical necessity
  criteria

  •    Develop and document of program to perform denial
  function meeting all regulatory and PacifiCare standards.

  	
   

  	
  Weekly
  submission of denial logs.

  	
   

  	
   

  •    Pre-delegation onsite assessment to determine
  ability to perform function.

  •    Annual onsite assessment to determine ability to
  perform function.

  
	
  Benefit
  Interpretations

  	
   

  	
  Delegated

  	
   

  	
  •    Responsible for ensuring eligibility and benefits
  appropriately followed.

  •    Responsible for ensuring appropriate structure,
  standards and Policies and Procedures followed.

  	
   

  	
  For Benefit
  Interpretations MG must:

  •    Comply with PacifiCare’s Turn Around Times

  •    Develop and document program to perform benefit
  interpretations function meeting all regulatory and PacifiCare standards.

  	
   

  	
   

  	
   

  	
  •    Pre-delegation onsite assessment to determine
  ability to perform function.

  •    Annual onsite assessment to determine ability to
  perform function.

  
	
  Appeals

  	
   

  	
  Delegated

  	
   

  	
  Responsible
  for handling all member and provider appeals.

  	
   

  	
  •    Develop and document program to support
  cooperation with PacifiCare in handling appeals.

  	
   

  	
  PacifiCare
  will provide the MG a quarterly report to show number of

  	
   

  	
  •    Pre-delegation onsite assessment to determine
  ability to perform function.

  

 

64

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  •    Notify PacifiCare of all member and provider
  appeals coming through MG.

  	
   

  	
  appeals and
  overturn rate for specific MG.

  	
   

  	
  •    Annual onsite assessment to determine ability to
  perform function.

  

 

PacifiCare’s
responsibilities relating to Medical Management and those responsibilities, which
PacifiCare has delegated to the Medical Group, are outlined above.

 

The
Medical Group agrees to be accountable for all responsibilities delegated by
PacifiCare and will not further delegate any such responsibilities without the
prior written approval by PacifiCare.

 

PacifiCare
will perform audits annually and as needed to evaluate the group’s delegated
status.  In the event there are
deficiencies PacifiCare will perform audits annually and as needed to evaluate
the group’s delegated status.  In the
event there are deficiencies identified in the audit, PacifiCare will provide a
specific corrective action plan.  If the
group is not able to comply with the corrective action plan within the
specified time frame, PacifiCare may revoke the group’s delegated status.

 

65

 

	
   

  	
  PACIFICARE
  OF CALIFORNIA

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Brian
  Jeffrey

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  Vice
  President

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
  6/20/01

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  MEDICAL
  GROUP

  Prospect Medical Group

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Peter G.
  Goll

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  Senior Vice
  President

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
  5-16-01

  	
   

  
						

 

66

 

PACIFICARE OF CALIFORNIA

 

MEDICAL GROUP/IPA SERVICES AGREEMENT

(PROFESSIONAL CAPITATION)

 

EXHIBIT 3

 

PRODUCT ATTACHMENTS

VERIFICATION OF RECEIPT OF PROVIDER MANUAL,

FORM SUBSCRIBER AGREEMENT AND EVIDENCE OF COVERAGE

(This Exhibit 3 is an integral part of this Agreement)

 

MEDICAL GROUP
NAME: Prospect Medical Group

 

VERIFICATION
OF RECEIPT OF PROVIDER MANUAL AND SUBSCRIBER AGREEMENT AND EVIDENCE OF
COVERAGE:

 

A copy of the
PacifiCare Provider Policies and Procedures Manual and standard form Subscriber
Agreement and Evidence of Coverage for each of the Managed Care Plans specified
below has been provided to Medical Group by PacifiCare prior to the execution
of this Agreement:

 

	
  By:

  	
  /s/ Peter G.
  Goll

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
  Senior Vice
  President

  	
   

  
	
   

  	
   

  	
   

  
	
  Date:

  	
  5-16-01

  	
   

  
				

 

ATTACHMENTS:

 

The following
attachments, when initialed by PacifiCare and Medical Group, are an integral
part of this Agreement:

 

	
   

  	
   

  	
  PacifiCare

  	
   

  	
  Medical
  Group

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  PacifiCare
  Commercial Health Plan

  	
   

  	
  /s/ BJ

  	
   

  	
  /s/ PG

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  PacifiCare
  Commercial POS Health Plan

  	
   

  	
  /s/ BJ

  	
   

  	
  /s/ PG

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Secure
  Horizons Health Plan

  	
   

  	
  /s/ BJ

  	
   

  	
  /s/ PG

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Division of
  Financial Responsibility

  	
   

  	
  /s/ BJ

  	
   

  	
  /s/ PG

  

 

***
Confidential Treatment requested.

 

67

 

PRODUCT ATTACHMENT A

 

PACIFICARE COMMERCIAL HEALTH PLAN

 

This Product
Attachment A, along with the Base Agreement, sets forth the specific terms and
conditions which are applicable to the PacifiCare Commercial Health Plan, as
defined below.

 

ARTICLE I

DEFINITIONS

 

The following
terms shall have the meaning attributed below for purposes of the PacifiCare
Commercial Health Plan, as described in this Product Attachment A.  Capitalized terms not otherwise defined
herein shall have the meaning assigned to them in the Base Agreement.

 

1.1           Commercial Plan Premium is the
premium received by PacifiCare each month for PacifiCare Commercial Plan
Members, excluding amounts to pay broker and agent commissions/compensation,
Premium taxes and premiums for Supplemental Benefits.

 

1.2           OPM Agreement is the agreement
between PacifiCare and the Federal Office of Personnel Management for the
provision of Covered Services to persons enrolled in the PacifiCare Commercial
Plan through their participation in the health benefits programs for federal
employees and their dependents.

 

1.3           PacifiCare Commercial Plan is any and
all of the various Managed Care Plans sold by PacifiCare to individuals
(excluding individuals eligible for the PacifiCare Medicaid Plan and the Secure
Horizons Health Plan) and employer groups, associations with employer group
participation and unions which purchase benefits for their employees and their
dependents.

 

1.4           Commercial Plan Members are Medical
Group Members enrolled in the PacifiCare Commercial Plan.

 

1.5           Supplemental Benefits are benefits
offered under the PacifiCare Commercial Plan which require separate premium, in
addition to the Commercial Plan Premium, as consideration for the additional
benefits.

 

ARTICLE 2

DUTIES OF MEDICAL GROUP

 

2.1           Provision of Covered Services.  Medical Group and its Participating
Providers shall provide Covered Services to Commercial Plan Members pursuant to
the terms of the Base Agreement and this Product Attachment A.

 

68

 

2.2           Compliance with OPM Agreement.  Medical Group shall comply with all
requirements in the OPM Agreement which are applicable to Medical Group as a
subcontractor of PacifiCare as a result of this Agreement.  Without limiting the foregoing, Medical
Group shall ensure that all provisions of the OPM Agreement which are
applicable to Medical Group’s Participating Providers are included in Medical
Group’s subcontracts with its Participating Providers.  A copy of the OPM Agreement shall be
provided to Medical Group concurrent with the execution of this Agreement.

 

2.3           Compliance with Subscriber Agreements for
PacifiCare Commercial Plan.  Medical
Group and its Participating Providers shall comply with all requirements in
Subscriber Agreements for the PacifiCare Commercial Plan which are applicable
to Medical Group.  PacifiCare shall make
good faith efforts to notify Medical Group of any such requirements that are
not otherwise reflected in this Agreement.

 

ARTICLE 3

COMPENSATION

 

3.1           Capitation Payments for Commercial Plan
Members.  Capitation payments to IPA
for Commercial Plan Members shall be age/sex/plan adjusted to reflect eligible
Commercial Plan Members.  PacifiCare
shall produce age/sex/plan tables, which during the first month of the
effective date of any rate change shall yield an average per member per month
(“PMPM”) rate based upon the membership assigned to the applicable IPA.  Effective January 1, 2001, for capitation
payments to IPA for Commercial Plan, the average PMPM yield shall be ***,
subject to the adjustments set forth in Article 5 of the Base Agreement and the
adjustments set forth below in this Section. 
Effective January 1, 2002, the average PMPM yield shall be ***.
PacifiCare shall disclose the yield to IPA in writing and IPA shall have the
right to audit for verification.  The
age/sex/plan tables shall be based on an actuarial analysis by a mutually
acceptable third party.

 

3.1.1        Premium Adjustments.  The Commercial Plan Premium and benefits may
be amended for each Subscriber Agreement upon the annual renewal date of each
Subscriber Agreement at the sole discretion of PacifiCare.

 

3.1.2        Adjustment for ISL Premium.  In calculating Capitation Payments due to
Medical Group, PacifiCare shall deduct the ISL Premium amount set forth herein
from the amounts otherwise due to Medical Group, unless PacifiCare has approved
of Medical Group’s opting out of PacifiCare’s ISL Program.

 

69

 

3.1.3        Adjustment for Experience-Rated Managed Care
Plans.  Capitation Payments for
Experience Rated Plans shall be calculated utilizing the following definitions
and methodology:

 

(i)            An “Experience-Rated Plan” is a
non-federally-qualified plan in which the Subscriber Group’s premium is
partially deferred or adjusted to reflect the actual medical costs incurred by
Commercial Plan Members.

 

(ii)           The “Net Actuarial Experience Rate” shall
mean a rate calculated by the same method used to determine premium for
federally-qualified plans, except that trended claims and utilization data may
be considered to determine expected medical costs and PacifiCare’s
administrative retention may be adjusted to reflect actuarial risk taken by the
Subscriber Group instead of PacifiCare.

 

(iii)          For Experience-Rated Plans, Capitation
Payments shall be calculated as a percent of the Net Actuarial Experience Rate
rather than based on a percent of the Commercial Plan Premium.  The Net Actuarial Experience Rate, like the
Commercial Plan Premium, shall exclude broker and agent commissions, premium
taxes and premiums for Supplemental Benefits.

 

3.2           ISL Program.  The ISL Deductible, ISL Premium and ISL
Coinsurance for the Commercial Plan shall initially be:

 

(i)            ISL Deductible shall be zero dollars ($0)
per Commercial Plan Member per calendar year.

 

(ii)           ISL Premium shall be zero percent (0%) of
the Commercial Plan Premium.

 

(iii)          ISL Coinsurance shall be zero percent (0%) of
Cost of Care in excess of the ISL Deductible.

 

If PacifiCare has approved of Medical Group’s opt out of the ISL
Program, the above amounts and percentages will reflect “zero.” In such event,
Medical Group shall be required to obtain ISL coverage from a third-party
insurance carrier in accordance with Section 5.5.5 of the Base Agreement.

 

3.3           Commercial Hospital Incentive Program.  PacifiCare shall establish and administer an
annual Commercial Hospital Incentive Program for the PacifiCare Commercial Plan
(the “CHIP”).  The CHIP is designed to
provide an incentive for the efficient and effective use of Hospital Services,
and shall be calculated utilizing the terms defined below.  All calculations for the CHIP

 

70

 

shall be based upon Commercial Plan Members, excluding Commercial POS Plan
Members.

 

3.3.1        Reinsurance Program.  Claims under the Reinsurance Program shall
be valued as follows: *** per acute inpatient day, *** per Skilled Nursing
Facility day and *** for all other claims under the program.  The Reinsurance Deductible, Reinsurance
Premium and Reinsurance Coinsurance for the Commercial Plan shall initially be:

 

(i)            Reinsurance Deductible shall be *** per
Commercial Plan Member per calendar year.

 

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

 

(iii)          Reinsurance Coinsurance: None.

 

3.3.2        CHIP Budget.  The CHIP Budget for Commercial Plan Members shall be age/sex/plan
adjusted to reflect eligible Commercial Plan Members.  For the CHIP Budget, the average PMPM yield shall be *** per
Commercial Plan Member per month, excluding Commercial POS Plan Members, less
PacifiCare Commercial Plan Reinsurance Premium, if any, and is subject to the
adjustments set forth in Article 5 of the Base Agreement and the adjustments
further specified below.

 

3.3.3        CHIP Expense.  CHIP Expense shall be equal to the sum of the following:

 

(i)            Inpatient costs for Hospital Services
rendered to Commercial Plan Members, excluding Commercial POS Plan Members, by
Participating Providers, valued at the actual costs incurred by PacifiCare; plus,

 

(ii)           Other Hospital Services rendered to
Commercial Plan Members, excluding Commercial POS Plan Members, by
Participating Providers other than inpatient services, valued at actual costs
incurred by PacifiCare; plus,

 

(iii)          The actual amount paid for Hospital Services
which are rendered by non- Participating Providers; minus,

 

(iv)          Amounts paid by PacifiCare under the
Reinsurance Program, if any; minus

 

(v)           Any and all amounts received from third
parties for Hospital

 

71

 

Services provided to Commercial Plan Members, excluding Commercial POS
Plan Members, through coordination of benefits, work-related accidents or
injuries, stop-loss and reinsurance payments and Member Copayments.

 

3.3.4        CHIP Surplus.  In the event the CHIP Expense is less than the CHIP Budget, the
surplus shall be allocated as follows:

 

*** to Medical Group 

*** to PacifiCare

 

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

 

*** to Medical Group

*** to PacifiCare

 

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

 

3.4           Commercial Plan Pharmacy Incentive
Program.  PacifiCare shall establish
and administer an annual Pharmacy Incentive Program for the PacifiCare
Commercial Plan (the “PIP”). The PIP is designed to provide an incentive for
the efficient and effective use of Outpatient Pharmacy Supplemental Benefits
for Commercial Plan Members.  The PIP
shall be calculated as follows:

 

3.4.1        Outpatient Pharmacy Supplemental Benefits
shall be the benefits made available by PacifiCare under the PacifiCare
Supplemental Pharmacy Benefit, as defined in the applicable Subscriber
Agreement.

 

3.4.2        PIP Budget shall equal *** of the
premium received by PacifiCare for Outpatient Pharmacy Supplemental Benefits
for Commercial Plan Members plus thirty-one cents ($0.31) per Commercial Plan
Member per month, which amount is established as a credit for rebates received
from pharmaceutical manufacturers.  This
credit may or may not reflect the total pharmaceutical manufacturer rebate
revenues received by PacifiCare.  The
PIP Budget shall be retained by PacifiCare for purposes of administering the
PIP.

 

3.4.3        PIP Expense shall equal the expense
incurred for the provision of Outpatient Pharmacy Supplemental Benefits during
the applicable period.

 

3.4.4        PIP Surplus.  In the event the PIP Expense is less than the PIP Budget, *** of
the surplus shall be allocated to Medical Group.

 

72

 

3.4.5        PIP Deficit.  In the event that the PIP Expense is greater than the PIP Budget,
*** of the deficit shall be allocated to Medical Group not to exceed *** per
Commercial Plan Member per month.

 

3.5           Maternity Payments.  This
Section 3.5 is only applicable during the period January 1, 2001, through
December 31, 2001. For term pregnancies delivered within nine (9)
months of a Subscriber’s initial assignment to Medical Group, PacifiCare shall
pay Medical Group *** at the time of processing the inpatient obstetrical
claim.

 

3.6           Mammography Services.  This
Section 3.6 is only applicable during the period January 1, 2001, through
December 31, 2001. Medical Group shall receive *** for each
screening and diagnostic mammography study performed above the 1987 PacifiCare
wide baseline, specific to the PacifiCare commercial program, for such studies.
(This baseline equals ninety (90) studies per one thousand (1,000) adult
females per Year.)

 

73

 

IN WITNESS WHEREOF, the parties hereto have
executed this Product Attachment A.

 

 

	
   

  	
  PACIFICARE
  OF CALIFORNIA

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Brian
  Jeffrey

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  Vice
  President

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
  6/20/01

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  MEDICAL
  GROUP

  Prospect Medical Group

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Peter G.
  Goll

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  Senior Vice
  President

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
  5-16-01

  	
   

  
					

 

74

 

PRODUCT ATTACHMENT B

PACIFICARE COMMERCIAL POINT-OF-SERVICE PLAN

 

This Product
Attachment B, along with Product Attachment A and the Base Agreement, sets
forth the terms and conditions which are applicable to the PacifiCare
Commercial Point-of-Service Plan, as defined below.

 

ARTICLE 1

DEFINITIONS

 

The following
terms shall have the meaning attributed below for purposes of the PacifiCare
Commercial Point-of-Service Plan, as described in this Product Attachment
B.  Capitalized terms not otherwise
defined herein shall have the meaning assigned to them in the Base Agreement.

 

1.1           In-Network Services are Covered
Services received by Commercial POS Plan Members which are (a) provided or
arranged by Medical Group pursuant to the PacifiCare Commercial Plan; (b)
received from a non-contracting Provider following an authorization from
Medical Group; (c) Emergency Services; and (d) Urgently Needed Services.

 

1.2           In-Network Hospital Services are
Hospital Services received by Commercial POS Plan Members which are (a)
provided or arranged by Medical Group pursuant to the PacifiCare Commercial
Plan; (b) received from a non-contracting Provider following an authorization
from Medical Group; (c) Emergency Services; and (d) Urgently Needed Services.

 

1.3           Out-of-Network Services are Covered
Services, excluding Emergency Services and Urgently Needed Services, which are
received by Commercial POS Plan Members without the prior authorization of
Medical Group.

 

1.4           PacifiCare Commercial Point-of-Service
(“POS”) Plan is any PacifiCare Commercial Plan, as defined in Product
Attachment A, under which Members are entitled to coverage for both In-Network
Services and Out-of-Network Services.

 

1 5           Commercial POS Plan Members are
Medical Group Members enrolled in the PacifiCare Commercial POS Plan.

 

1 6           POS Plan Premium is the sum of the
In-Network Premium and the Out-of-Network Premium, as defined below:

 

1.6.1        In-Network Premium is the Commercial
Plan Premium, as defined in Product Attachment A, billed or accounted for by
PacifiCare for

 

75

 

coverage of In-Network Services under the PacifiCare Commercial POS
Plan.

 

1.6.2        Out-of-Network Premium is the Commercial
Plan Premium, as defined in Product Attachment A, billed or accounted for by
PacifiCare (or an insurance company or self-insured employer which has assumed
the risk for the Out-of-Network Services), for coverage of Out-of-Network
Services under the PacifiCare Commercial POS Plan.

 

ARTICLE 2

DUTIES OF MEDICAL GROUP

 

2.1           Covered Services.  Medical Group and its Participating
Providers shall provide or arrange Covered Services to Commercial POS Plan
Members under same terms and conditions as Commercial Plan Members.

 

2.2           Reciprocity; Reimbursement for
Out-of-Network Services.  If any of
Medical Group’s Participating Providers provides Out-of-Network Services to a
Commercial POS Plan Member, such Medical Group Participating Provider shall
bill PacifiCare or the payor responsible for payment for Out-of-Network
Services for such services and agrees to accept full payment at the Cost of
Care.  Neither Medical Group nor its
Participating Providers shall encourage Members to receive Covered Services
from non-Participating Providers.  Medical
Group shall include the requirements of this Section in all subcontracts with
its Participating Providers.

 

ARTICLE 3

COMPENSATION

 

3.1           Capitation Payments for Commercial POS
Plan Members.  For Commercial POS
Plan Members, PacifiCare will pay Medical Group *** of the Capitation Payment
for Commercial Plan Members, subject to the adjustments set forth in Article 5
of the Base Agreement and the adjustments set forth below in this Section.  Capitation Payments for Commercial POS Plan
Members will be based on a percentage of the In-Network Premium only.  The payment described in this Section is
payment in full for In-Network Services, except for Copayments, coordination of
benefits, third party recoveries and payments under the PacifiCare POS Control
Program set forth below.

 

3.1.1        Adjustment for ISL Premium.  In calculating Capitation Payments due to
the Medical Group for Commercial POS Plan Members, PacifiCare shall deduct ***
of the ISL Premium amount set forth in Section 3.2 of Product Attachment A from
the amounts otherwise due to Medical Group, unless PacifiCare has approved of Medical
Group’s opt out of PacifiCare’s ISL Program.

 

76

 

3.2           Commercial POS Control Program.  PacifiCare shall establish and administer an
annual Control Program for the PacifiCare Commercial Point-of-Service Plan
(“Commercial POS Control Program”). The Commercial POS Control Program is
designed to provide an incentive for the efficient and effective use of
In-Network Hospital Services and to control Our-of-Network Services, and shall
be calculated in accordance with the following provisions.

 

3.2.1        Definitions.  The following terms shall have the meaning attributed below for
purposes of the Commercial POS Control Program.

 

(i)            POS Plan Budget shall equal *** of
In-Network Premium plus *** of Out-of-Network Premium, less PacifiCare POS
Control Program Reinsurance Premium, if any.

 

(ii)           POS Plan Costs shall mean the
following:

 

(a)  Claims paid for In-Network Hospital Services incurred
during the current period, calculated at the actual amount paid; plus,

 

(b) Claims paid for Out-of-Network Services incurred
during the current period, calculated at the actual amount paid; plus,

 

(c)  Claims paid for In-Network Hospital Services and
Out-of-Network Services incurred but not included in prior period Commercial
POS Control Program calculations, calculated at the actual amount paid; minus,

 

(d) Any and all amounts received from third party
liability and coordination of benefit recoveries for In-Network Hospital
Services and Out-of-Network Services that are received during the period of
calculation.

 

(iii)          Budget Surplus.  The amount, if any, by which the POS Plan
Budget exceeds the POS Plan Costs for any calendar year

 

(iv)          Budget Deficit.  The amount, if any, by which the POS Plan
Costs exceeds the POS Plan Budget for any calendar year.

 

(v)           Capitation Restoration Amount.  The difference between (a) the amount
Medical Group would have received if Medical Group’s Capitation Payments for
Commercial POS Plan Members had been determined by multiplying the percentage
set forth in Section 3.1 of Product Attachment A by the In-

 

77

 

Network Premium and (b) the actual capitation paid to Medical Group for
Commercial POS Plan Members for the relevant contract year.

 

3.2.2        POS Control Program Reinsurance.  Unless PacifiCare has approved of Medical
Group’s opt out of POS reinsurance (“POS Control Program Reinsurance”),
PacifiCare shall provide reinsurance (the “Commercial POS Control Program
Reinsurance”) in order to provide protection for the Commercial POS Plan Budget
when Cost of Care for POS In-Network Hospital Services and Out-of-Network
Medical Group and Hospital Services (“Out-of-Network Services”) exceeds a
specified dollar amount per Medical Group Member per calendar year (the “Commercial
POS Control Program Reinsurance Deductible”). Costs for In-Network Hospital
Services and Out-of-Network Services that exceed the Commercial POS Control
Program Reinsurance Deductible shall be considered an expense against the
Commercial POS Plan Budget, of which surpluses and deficits are shared equally
between PacifiCare and the Commercial POS Plan Budget.

 

3.2.3        Reinsurance Program.  Claims under the POS Control Program
Reinsurance shall be valued at *** per acute inpatient day, *** per skilled nursing
facility day, and *** for all other claims. 
The Reinsurance Deductible and Reinsurance Premium for the Commercial
POS Plan shall initially be:

 

(i)            Reinsurance Deductible shall be *** per
Commercial Plan Member per calendar year.

 

(ii)           In-Network Reinsurance Premium shall be ***
per Commercial POS Plan Member per month.

 

(iii)          Out-of-Network Reinsurance Premium shall be
*** per Commercial POS Plan Member per month.

 

If PacifiCare has approved of Medical Group’s opt out of the
Reinsurance Program, the above amounts and percentages will reflect “zero.” In
such event, Medical Group shall be required to obtain reinsurance coverage from
a third-parry insurance carrier in accordance with Section 5.5.5 of the Base
Agreement.

 

3.2.4        Documentation.  PacifiCare shall provide Medical Group with a list of In-Network
Hospital Services claim payments and Out-of-Network claim payments in support
of computation and accuracy of POS Plan Costs, third party liability and
coordination of benefit recoveries,

 

78

 

assumptions and data supporting the POS Plan Budget, the Budget
Surplus, and the Budget Deficit and the Capitation Restoration Amount.

 

3.2.5        Budget Surplus Reconciliation.  Medical Group shall receive *** of the Budget
Surplus, until such time as Medical Group has received the applicable
Capitation Restoration Amount.  If the
Budget Surplus exceeds the Capitation Restoration Amount, then PacifiCare and
Medical Group shall each be entitled to *** of the remaining Budget Surplus.

 

3.2.6        Budget Deficit Reconciliation.  In the event of a Budget Deficit, Medical
Group shall not be responsible for making any payments under the PacifiCare POS
Control Program.  However, *** of the
Budget Deficit amount shall be considered a Medical Group obligation for
purposes of offsetting surpluses under other incentive programs under the
Agreement.

 

3.3           Adjustment of Rates.  Capitation Payments for Commercial POS Plan
Members and the POS Plan Budget may be prospectively adjusted on an annual
basis to reflect actual experience under the Commercial POS Plan; provided,
however, that in no event shall the amount of any increase or decrease to such
Capitation Payments be greater than ten (10) percentage points in any given
year.

 

79

 

IN WITNESS
WHEREOF, the parties hereto have executed this Product Attachment B.

 

 

	
   

  	
  PACIFICARE
  OF CALIFORNIA

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Brian
  Jeffrey

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  Vice
  President

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
  6/20/01

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  MEDICAL
  GROUP

  Prospect Medical Group

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Peter G.
  Goll

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  Senior Vice
  President

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
  5-16-01

  	
   

  
						

 

80

 

PRODUCT ATTACHMENT C

 

SECURE HORIZONS HEALTH PLAN

 

This Product
Attachment C, along with the Base Agreement, sets forth the terms and
conditions which are applicable to the Secure Horizons Health Plan, as defined
below.

 

ARTICLE 1

DEFINITIONS

 

The following
terms shall have the meaning attributed below for purposes of the Secure
Horizons Health Plan, as described in this Product Attachment C.  Capitalized terms not otherwise defined
herein shall have the meaning assigned to them in the Base Agreement.

 

1.1           HCFA is the Health Care Financing
Administration, an administrative agency of the United States Government,
responsible for administering the Medicare program.

 

1.2           HCFA Agreement is the Medicare +
Choice contract between PacifiCare and HCFA.

 

l.3            Medicare is the Hospital Insurance
Plan (Part A) and the Supplementary Medical Insurance Plan (Part B) provided
under Title XVIII of the Social Security Act, as amended.

 

1.4           Monthly HCFA Payment is the revenue
received by PacifiCare each month from HCFA, as determined by HCFA, for
providing Covered Services to Secure Horizons Members.

 

1 5           Secure Horizons Health Plan is the
prepaid health plan operated by PacifiCare pursuant to the HCFA Agreement which
provides Covered Services to individuals (including retirees) eligible to
receive Medicare benefits.

 

1.6           Secure Horizons Members are Medical
Group Members enrolled in the Secure Horizons Health Plan.

 

1.7           Secure Horizons Revenue is the
Monthly HCFA Payment for Medical Group Members enrolled in the Secure Horizons
Health Plan, less payments for broker and agent commissions/compensation
(when applicable), premium taxes and amounts used to fund the Market Specific
Benefit Program (as defined below).

 

81

 

ARTICLE 2

DUTIES OF MEDICAL GROUP

 

2.1           Compliance with HCFA Agreement and
Federal Medicare Law.  Medical Group
shall comply with all requirements in the HCFA Agreement which are applicable
to Medical Group as a subcontractor of PacifiCare as a result of this
Agreement.  Without limiting the
foregoing, Medical Group shall ensure that all provisions of the HCFA Agreement
which are applicable to Medical Group’s Participating Providers as a
subcontractor of PacifiCare are included in Medical Group’s subcontracts with
its Participating Providers.  A copy of
the HCFA Agreement shall be made available to Medical Group concurrent with the
execution of this Agreement.  Medical
Group and its Participating Providers shall comply with Title XVIII of the
Social Security Act and the regulations adopted thereunder by HCFA for the
Medicare program.

 

2.2           Medicare Participation Standards.  Medical Group shall require that all of its
Participating Providers who provide services to Secure Horizons Members meet
the standards for participation and all applicable requirements for providers
of health care services under the Medicare program.  In addition, Medical Group shall require that all facilities and
offices utilized by Medical Group and its Participating Providers to provide or
arrange Covered Services to Secure Horizons Members shall comply with facility
standards established by HCFA.

 

2.3           Specific Provisions Pertaining to
Benefits, Coverage and Beneficiary Protections.  Without limiting any of Medical Group’s other obligations under
this Agreement, Medical Group specifically agrees to comply with the following
policies and procedures:

 

(i)            PacifiCare’s policies pertaining to the
collection of copayments which prohibit the collection of copayments for
routine injections, routine immunizations, flu immunizations, and the
administration of pneumococcal/pneumonia vaccine.

 

(ii)           PacifiCare’s policies pertaining to
pre-certification which provide that Secure Horizons Members may directly
access a provider for mammography and influenza vaccinations and women’s health
specialists for routine and preventative health care.

 

(iii)          PacifiCare’s policies pertaining to complex
and serious conditions which provide for procedures to identify, assess and
establish treatment plans for persons with complex or serious medical
conditions.

 

(iv)          PacifiCare’s policies pertaining to
enrollment and assessment of new Secure Horizons Members including requirements
to conduct a health

 

82

 

assessment
of all new Secure Horizons Members within ninety (90) days of the effective
date of their enrollment.

 

2.4           Confidentiality of Medical Records. 
Medical Group shall establish and maintain procedures and controls so
that no information contained in its records or obtained from HCFA or from
others in carrying out the terms of this Agreement shall be used by or
disclosed by it, its agents, officers, or employees except as provided in
Section 1106 of the Social Security Act, as amended, and regulations prescribed
thereunder.

 

2.5           Submission of Data. 
Medical Group shall cooperate with PacifiCare in submitting to the
Secretary of Health and Human Services statistical data pertaining to Covered
Services provided by Medical Group, enrollment and disenrollment data and any
other reports the Secretary may reasonably require to carry out its functions
under the Medicare + Choice program.

 

2.6           Advance Directives. 
Medical Group shall document all Secure Horizons Member patient records
with respect to the existence of an Advance Directive in compliance with the
Patient Self-Determination Act (Section 4751 of the Omnibus Reconciliation Act of
1990), as amended, and other appropriate laws. 
For purposes of this Agreement, an Advance Directive is a Member’s
written instructions, recognized under State law, relating to the provision of
health care when the Member is not competent to make health care decisions as
determined under State law.  Examples of
Advance Directives are living wills and durable powers of attorney for health
care.

 

2.7           Non-Discrimination. 
Medical Group understands that HCFA requires compliance with the
provisions of this Section as a condition for participation in the Secure
Horizons Health Plan.  Medical Group and
its Participating Providers shall not unlawfully discriminate against any of
their employees or applicants for employment or against any Members on the
basis of race, color, creed, national origin, ancestry, religion, sex, marital
status, age (except as provided by law), sexual orientation, gender identity,
or physical or mental handicap, including HIV status.  Medical Group and its Participating Providers shall ensure that
the evaluation and treatment of their employees and applicants for employment
and of Members are free of such discrimination.  Medical Group and its Participating Providers shall comply with
Title VI of the Civil Rights Act of 1964, as amended (42 U.S.C. Section 2000d
et. seq.), Section 504 of the Rehabilitation Act of 1973, as amended (29 U.S.C.
Section 794) and the regulations thereunder, Title IX of the Education
Amendments of 1972, as amended (20 U.S.C. Section 1681 et. seq.), the Age
Discrimination Act of 1975, as amended (42 U.S.C. Section 6101 et. seq.),
Section 654 of the Omnibus Budget Reconciliation Act of 1981 , as amended (42
U.S.C. Section 9849), the Americans With Disabilities Act (P.L. 101-365) and
all implementing regulations, guidelines and standards as are now or may be
lawfully adopted under the above statutes

 

83

 

2.8           Termination of HCFA Agreement.  In the event the HCFA Agreement is
terminated or not renewed, the provisions of this Agreement relating to the
Secure Horizons Health Plan shall automatically terminate unless otherwise
agreed by HCFA and PacifiCare.

 

ARTICLE 3

COMPENSATION

 

3.1           Capitation Payments for Secure Horizons
Members.  Capitation Payments for
Secure Horizons Members shall be *** of the Secure Horizons Revenue per Secure
Horizons Member per month, plus zero dollars ($0) for each Secure Horizons
Member for whom PacifiCare has received a monthly member premium, subject to
the adjustments set forth in Article 5 of the Base Agreement and the
adjustments set forth below in this Section.

 

3.1.1        Adjustment for ISL Premium.  In calculating Capitation Payments due to
Medical Group, PacifiCare shall deduct the ISL Premium amount set forth herein
from the amounts otherwise due to Medical Group, unless PacifiCare has approved
of Medical Group’s opting out of PacifiCare’s ISL Program.

 

3.2           ISL Program.  The ISL Deductible, ISL Premium and ISL
Coinsurance for the Secure Horizons Plan shall initially be:

 

(i)            ISL Deductible shall be zero dollars ($0)
per Secure Horizons Member per calendar year.

 

(ii)           ISL Premium shall be zero percent (0%) of the
Secure Horizons Revenue.

 

(iii)          ISL Coinsurance shall be zero percent (0%) of
the Cost of Care in excess of the ISL Deductible.

 

If PacifiCare has approved of Medical Group’s opt out of the ISL
Program, the above amounts and percentages will reflect “zero.” In such event,
Medical Group shall be required to obtain ISL coverage from a third-party
insurance carrier in accordance with Section 5.5.5 of the Base Agreement.

 

3.3           Secure Horizons Hospital Incentive
Program.  PacifiCare shall establish
and administer an annual Hospital Incentive Program for the Secure Horizons
Health Plan (the “SHIP”). The SHIP is designed to provide an incentive for the
efficient and effective use of Hospital Services, and shall be calculated
utilizing the terms defined below.

 

3.3.1        Reinsurance Program.  Claims under the Reinsurance Program shall
be

 

84

 

valued as follows: $1,500 per acute inpatient day, $400 per Skilled
Nursing Facility day; and $0 for all other claims under the program.  The Reinsurance Deductible, Reinsurance
Premium and Reinsurance Coinsurance for the Secure Horizons Plan shall
initially be:

 

(i)            Reinsurance Deductible shall be sixty
thousand dollars ($60,000) per Secure Horizons Member per calendar year.

 

(ii)           Reinsurance Premium shall be two and 10/100
percent (2.10%) of the Secure Horizons Revenue.

 

(iii)          Reinsurance Coinsurance: None.

 

3.3.2        SHIP Budget.  The SHIP Budget for Secure Horizons Members shall be *** of the
Secure Horizons Revenue per Secure Horizons Member per Month, subject to the
adjustments set forth in Article 5 of the Base Agreement and further specified
below, less PacifiCare Secure Horizons Plan Reinsurance Premium, if any.

 

3.3.3        SHIP Expense.  SHIP Expense shall be equal to the sum of the following:

 

(i)            Inpatient costs for Hospital Services
rendered to Secure Horizons Members by Participating Providers valued at the
actual costs incurred by PacifiCare; plus,

 

(ii)           Other Hospital Services rendered to Secure
Horizons Members by Participating Providers other than inpatient services,
valued at actual costs incurred by PacifiCare; plus,

 

(iii)          The actual amount paid for Hospital Services,
which are rendered by non- Participating Providers; minus,

 

(iv)          Amounts paid by PacifiCare under the
Reinsurance Program, if any; minus,

 

(v)           Any and all amounts received from third
parties for Hospital Services provided to Secure Horizons Members through
coordination of benefits, work-related accidents or injuries, stop-loss and
reinsurance payments and Medical Group Member Copayments.

 

3.3.4        SHIP Surplus.  In the event the SHIP Expense is less than the SHIP Budget, the
surplus shall be allocated as follows:

 

*** to Medical Group

*** to PacifiCare

 

85

 

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

 

*** to Medical Group

*** to PacifiCare

 

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

 

3.4           Market-Specific Benefit Program.  PacifiCare may establish, at its sole
discretion, an annual Market-Specific Benefit Program (the “MSBP”). The MSBP is
designed to provide an incentive to control costs for certain additional
benefits (the “MSBP Benefits”) offered to Secure Horizons Members, as defined
in the applicable Subscriber Agreement, for the purpose of enhancing the
marketability of the Secure Horizons Health Plan.  The MSBP may include the following additional benefits and may be
amended from time to time by PacifiCare to reflect changes in the benefits:

 

Dental Benefits

Immunosuppressive Drugs

Outpatient Pharmacy Benefits

Respite Care

 

PacifiCare shall retain eight percent (8%) of the Monthly HCFA Payment
(the “MSBP Budget”) and add to it sixty four cents ($0.64) per Secure Horizons
Plan Member per month, which amount is established as a credit for rebates
received from pharmaceutical manufacturers. 
This credit may or may not reflect the total pharmaceutical manufacturer
rebate revenues received by PacifiCare for purposes of funding and
administering the MSBP.  The MSBP shall
be calculated as follows:

 

3.4.1        MSBP
Benefits shall be the additional benefits listed above in this Section and
made available under the Secure Horizons Health Plan as defined in the
applicable Subscriber Agreement.

 

3.4.2        MSBP Expense shall equal the expense
incurred for the provision of MSBP Benefits during the applicable period.

 

3.4.3        MSBP Surplus.  In the event the MSBP Expense is less than the MSBP Budget, the
surplus shall be allocated as follows:

 

fifty percent (50%) to Medical Group

fifty percent (50%) to PacifiCare

 

86

 

3.4.4        MSBP Deficit.  In
the event the MSBP Expense is greater than the MSBP Budget, fifty percent (50%)
of the deficit shall be allocated to Medical Group not to exceed three dollars
($3.00) per member per month.

 

3.4.5        Settlements.  The calculations in this
Section and settlements shall be performed in accordance with the procedures
specified in Article 5 of the Base Agreement.

 

3.5           Collection of Charges From Third Parties When
Medicare Is Not the Primary  Payor. 
Medical Group shall accept Capitation Payments from PacifiCare as
payment in full for Covered Services provided to Secure Horizons Members;
provided, however, when Medicare is not the primary payor for Covered Services,
such as when the Secure Horizons Member is entitled to payment from another
third party or for payment for a workers’ compensation claim, or from other
primary insurance coverage maintained by Secure Horizons Member, Medical Group
shall make no demand upon PacifiCare for reimbursement under the Individual
Stop-Loss Program until all primary sources of payment have been pursued and it
is determined that full payment cannot be obtained within ten (10) months from
the date of the provision of Covered Services.

 

3.6           Mammography.  This Section 3.6 is only applicable during the period January 1, 2001,
through December 31, 2001. Medical Group shall receive *** for each screening and diagnostic mammography
study performed above the 1987 PacifiCare-wide baseline, specific to the Secure
Horizons program, for such studies. (This baseline equals 267 studies per one
thousand (1,000) adult females.) The amount due to Medical Group shall be
calculated based upon utilization data submitted by Medical Group and shall be
paid within one hundred and fifty (150) days of the end of the current calendar
year.

 

87

 

IN WITNESS
WHEREOF, the parties hereto have executed this Product Attachment C.

 

 

	
   

  	
  PACIFICARE
  OF CALIFORNIA

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Brian
  Jeffrey

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  Vice
  President

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
  6/20/01

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  MEDICAL GROUP

  Prospect Medical Group

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Peter G.
  Goll

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  Senior Vice
  President

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
  5-16-01

  	
   

  
						

 

88

 

DIVISION OF FINANCIAL RESPONSIBILITY

 

The following
matrix outlines the division of financial responsibility between PacifiCare,
Medical Group and the Hospital Incentive Program, the intent being to clarify
Covered Services categories in order to provide for accurate
administration.  The matrix serves as a
model under which broad Covered Service categories suggest the appropriate
financial responsibility for Covered Services not specifically listed.  The applicable Subscriber Agreement and
Evidence of Coverage should be consulted for an accurate and complete
description of Covered Services and the Provider Manual for administrative
clarification.  Member benefit
information should be verified prior to the provision of services.

 

Division of Financial Responsibility

 

	
  Service Description

  	
   

  	
  Medical

  Group

  	
   

  	
  Hospital

  	
   

  	
  PacifiCare

  	
   

  
	
  Allergy - Serum - OP

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Allergy - Testing & Tx
  - OP - Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Ambulance (Air and Ground)
  - OP

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Amniocentesis - OP - Fac & Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Anesthesiology - IP & OP
  - Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Autologous Blood Services -
  OP - Fac & Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Biofeedback (Medically
  Necessary) - OP

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Chemical Dependency (Detox)
  - IP & OP- Fac

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Chemical Dependency (Detox)
  - IP &  OP  -  Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Chemical Dependency (Rehab)
  - IP - Fac - CO

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Chemical Dependency (Rehab)
  - IP - Fac - SH

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Chemical Dependency (Rehab)
  - IP - Prof- CO

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Chemical Dependency (Rehab)
  - IP - Prof - SH

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Chemical Dependency (Rehab)
  - OP - Fac - CO

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Chemical Dependency (Rehab)
  - OP - Fac - SH

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Chemical Dependency (Rehab)
  - OP - Prof- CO

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Chemical Dependency (Rehab)
  - OP - Prof- SH

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Chemotherapy (Including
  Chemotherapy Drugs - Inject/Oral) - OP - Fac &
  Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Chemotherapy - IP - Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Chiropractic - Medical - OP
  - Fac & Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Chiropractic - Supplemental
  - OP - Fac & Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Circumcision - OP - Fac
  &  Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Diagnostic
  Tests - OP - Fac & Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  DME-IP

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  DME, Ostomy/Colostomy
  Supplies, Prosthetics/Ortbotics - OP

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Emergency Room - OP - Fac

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Emergency Room - OP - Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Endoscopic Studies - IP -
  Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Endoscopic
  Studies - OP - Fac

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Endoscopic
  Studies - OP - Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Family Planning - Abortions
  - OP - Fac

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  

 

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

 

89

 

	
  Service Description

  	
   

  	
  Medical

  Group

  	
   

  	
  Hospital

  	
   

  	
  PacifiCare

  	
   

  
	
  Family Planning - Abortions
  - OP - Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Family Planning -
  Contraceptive Devices - Insertion - OP - Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Family Planning -
  Contraceptive Devices - Non-Rx (eg. Norplant/TUD) - OP

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Family Planning -
  Contraceptive Devices - Prescription - OP

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Family Planning -
  GIFT/ZIFT/IVF - OP - Fac & Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Family Planning -
  Infertility Procedures - OP - Fac

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Family Planning -
  Infertility Procedures - OP - Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Family Planning - Infertility Testing - OP - Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Family Planning -
  Sterilization - IP & OP - Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Family Planning -
  Sterilization - IP - Fac

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Family Planning -
  Sterilization - OP - Fac

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Fetal Monitoring - OP - Fac
  & Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Health Education - OP

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Health Eval/Physical - OP

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Hearing Aids/Molds - OP

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Hearing Screening
  (Audiologic Evaluation) - OP

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Hemodialysis / Dialysis -
  IP & OP - Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Hemodialysis / Dialysis -
  OP - Fac

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Home Health Care / Home
  Infusion Therapy - OP - Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Hosp Based Phys
  Interpretative Serv Incl Radiology & Pathology
  - IP & OP - Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Hospice Services - IP -
  Prof- CO

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Hospitialization Services -
  IP - Fac

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Immunizations &
  Inoculations (Medically Necessary) -
  OP

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Injectables - Not Part of
  Outpatient Pharmacy Benefits - OP

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Laboratory/Pathology
  (Diagnostic Only) - OP - Fac

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Laboratory/Pathology
  (Diagnostic Only) - OP - Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Laboratory/Pathology - IP -
  Fac

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Lithotripsy - OP - Fac

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Lithotripsy - OP - Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Med/Surg Supplies (cast,
  splints, bandages) - Office - OP

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Medication - Prescription -
  OP

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Mental Health (Crisis
  Intervention) - OP - Prof - CO

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Mental Health - IP - Fac -
  CO

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Mental Health - IP - Fac -
  SH

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Mental Health - IP - Prof- CO

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Mental Health - IP - Prof-
  SH

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Mental Health - OP - Fac -
  CO

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Mental Health - OP - Fac -
  SH

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Mental Health- OP - Prof -
  CO

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Mental Health - OP - Prof -
  SH

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Observation Room - OP - Fac

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Oral Surgery / Dental
  Services - Accident & Injury Only - OP - Fac

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Oral Surgery / Dental
  Services - Accident & Injury Only - OP - Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Out of Area - IP & OP -
  Fac

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Out of Area - IP & OP -
  Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Outpatient Surgery - OP -
  Fac

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Outpatient Surgery - OP -
  Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Physician Services (All
  Professional Services) - IP & OP - Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Prosthetics - Surgical
  Implants - OP

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Radiation Therapy - IP
  & OP - Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Radiation Therapy - OP -
  Fac

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Radiology (Diagnostic Only)
  - OP - Fac

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  

 

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

 

90

 

	
  Service Description

  	
   

  	
  Medical

  Group

  	
   

  	
  Hospital

  	
   

  	
  PacifiCare

  	
   

  
	
  Radiology (Diagnostic Only)
  - OP - Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Radiology - IP - Fac

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Reconstructive Surgery - IP
  & OP - Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Reconstructive Surgery - OP
  - Fac

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Rehabilitation -
  Cardiac/OT/PT/RT/ST - OP - Fac

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Rehabilitation -
  Cardiac/OT/PT/RT/ST - OP - Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Skilled Nursing Facility -
  IP - Fac

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Sleep Studies - OP

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  TMJ - Evaluation (excludes
  dental exams/treatment) - OP - Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Transfusions - OP - Fac

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Transplants - IP - Fac

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Transplants - IP - Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Urgent Care - OP - Fac & Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Vision - Medical Treatment
  - OP - Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Vision - Refraction for
  Contact Lenses/Frames - OP - Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Vision Care Materials -
  Contact Lenses/Frames (non-cataract) - OP - CO

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Vision Care Materials -
  Contact Lenses/Frames (non-cataract) - OP - SH

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  

 

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

 

91

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