Document:

Exhibit 10.191

 

 

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

 

 

PacifiCare®

of California

 

	
   

  	
  5757
  Plaza Drive, Suite 150

  
	
   

  	
  Mail
  Stop CY 44-116

  
	
   

  	
  Cypress,
  California 90630

  

 

November 15,
2002

 

Raj
Takhar

Chief
Executive Officer

Gateway
Physicians Medical Associates, Inc.

710
N. Euclid St

Anaheim,
CA 92801

 

Re: Amendment to Agreement for Financial Terms for 2003

 

Dear
Raj:

 

This
letter constitutes an amendment to the current PacifiCare Medical Group/IPA
Services Agreement, dated January 1, 2001 (the “Agreement”) between
PacifiCare of California (“PacifiCare”) and Gateway Physicians Medical
Associates (“Medical Group”) setting forth the financial terms for their
arrangements for calendar year 2003.  Attached
are the material financial terms.  The
attached financial terms and the parties’ other agreements will be memorialized
in a formal Amendment to the PacifiCare Medical Group/IPA Services Agreement.  The formal Amendment will need to executed
by December 15, 2002 or the terms attached hereto may be rescinded by
PacifiCare.

 

NOW,
THEREFORE, in consideration of the foregoing, the parties hereto agree that the
Agreement is hereby modified as specified below:

 

1.                                       A new Section 1.35 National Preferred
Transplant Network (“NPTN”) under ARTICLE 1 DEFINTIONS is added to the
Agreement as follows:

 

1.34                           National Preferred Transplant Network (“NPTN”) is the national preferred referral network of hospitals,
professionals, ancillary, and other Participating Providers that have been
selected by PacifiCare (based on various criteria including quality,
performance levels, and outcomes) to provide to PacifiCare Members Covered
Services consisting of specific Transplant Services as set forth in the
applicable NPTN Agreement between PacifiCare and the NPTN Participating
Providers.

 

2.                                       New Sections 3.8  Transplant Services, 3.8.1 Transplant Services -
Definitions, 3.8.2 Financial Responsibility for Transplant Services,
and 3.8.3 Medical Management of Transplant Services under ARTICLE 3
ADMINISTRATIVE DUTIES OF PACIFICARE are added to the Agreement as follows:

 

3.8                                 Transplant Services.

 

3.8.1                        Transplant Services - Definitions.

 

K and R Letter Agreement

Gateway Physicians Medical Associates

Version 1.1

Effective: January 1, 2003

 

2

 

(a)                                  “Transplant Services” are Covered Services
for solid organ transplants, autologous hemopoetic stem cell transplantation
and allogeneic hemopoetic stem cell transplantation as described in the applicable
Subscriber Agreement and Evidence of Coverage.

 

(b)                              “NPTN” Transplant Services are Transplant
Services provided pursuant to and in accordance with PacifiCare’s NPTN program
to NPTN Members.

 

(c)                                    “NPTN Members” are:

 

(i) Members who have been approved for Transplant Services on or before
December 31, 2002 who consent to receive services pursuant to PacifiCare’s
NPTN Program and whose anticipated transplant outcomes should not be adversely
affected by a transfer into the NPTN Program;

 

(ii) Members who have been approved for Transplant Services on or after
January 1, 2003.

 

(d)                                 “Non-NPTN” Transplant Services are all
Transplant Services, which are not NPTN Transplant Services.  Without limiting the foregoing, Non-NPTN
Transplant Services include all Transplant Services provided to Members who are
not NPTN Members.

 

3.8.2                        Financial Responsibility for Transplant
Services.  The parties’ respective financial
responsibility for the various components of Transplant Services are described
in this Section 3.8, Section 5.14 (Compensation for Transplant
Services), and the Division of Financial Responsibility Matrix including
Attachment A to the DFR.

 

3.8.3                        Medical Management of Transplant Services.

 

(a)                                  All Transplant Services shall be provided in
accordance with the provisions of PacifiCare’s MM Program including without
limitation, the provisions of PacifiCare’s Provider Manual.  Specifically, but without limitation,
authorization of the evaluation of the recipient prior to listing for
transplantation, the actual transplant itself, and post transplant care up to
365 days post discharge, must be obtained from PacifiCare’s NPTN Medical
Director, or his or her designee, prior to the provision of Transplant
Services.

 

(b)                                 PacifiCare shall be responsible for providing,
coordinating and arranging for the Medical Management of NPTN Transplant
Services for which it is financially responsible.  Medical Group shall be responsible for providing, coordinating
and arranging Transplant Services for which it is financially responsible,
subject to coordination with PacifiCare pursuant to the terms of PacifiCare’s
MM Program.

 

(c)                                  Transplant Services provided by Medical Group
or pursuant to a Medical Group referral that are not authorized by PacifiCare
prior to the provision of the Transplant Services shall constitute Non-NPTN
Transplant Services and be the sole financial responsibility of the Medical
Group regardless of whether such

 

3

 

Transplant Services would have otherwise constituted NPTN Transplant
Services.

 

3.                                       Exhibit 1 MEDICAL GROUP FACILITIES AND
HOSPITAL(S) is deleted in its entirety. 
A new Exhibit 1 MEDICAL GROUP FACILITIES AND HOSPITAL(S) is
attached hereto and incorporated into the Agreement.

 

4.                                       Product Attachment A PACIFICARE COMMERCIAL
HEALTH PLAN is deleted in its entirety. 
A new Product Attachment A PACIFICARE COMMERCIAL HEALTH PLAN is
attached hereto and incorporated into the Agreement.

 

5.                                       Product Attachment B PACIFICARE COMMERCIAL
POINT OF SERVICE PLAN is deleted in its entirety.  A new Product Attachment B PACIFICARE COMMERCIAL POINT OF
SERVICE PLAN is attached hereto and incorporated into the Agreement.

 

6.                                       Product Attachment C SECURE HORIZONS
HEALTH PLAN is deleted in its entirety. 
A new Product Attachment C SECURE HORIZONS HEALTH PLAN is
attached hereto and incorporated into the Agreement.

 

7.                                       DIVISION OF FINANCIAL RESPONSIBILITY is deleted in its entirety.  A new Exhibit 4 DIVISION OF FINANCIAL
RESPONSIBILITY is attached hereto and incorporated into the Agreement.

 

8.                                       A new Attachment A NATIONAL PROVIDER
TRANSPLANT NETWORK under Exhibit 4 DIVISION OF FINANCIAL RESPONSIBILITY
is added to the Agreement and is attached hereto and incorporated into the
Agreement.

 

9.                                       A new Exhibit 5  QUALITY INCENTIVE PROGRAM is added to the Agreement
and is attached hereto and incorporated into the Agreement.

 

This
letter agreement, when counter-signed by Medical Group will constitute a
binding amendment to the Agreement and shall be terminable only in connection
with a termination of the Agreement.

 

If
you agree, please sign the enclosed duplicate copy of this letter.  In the interim, if you have any questions or
require additional information, please call Brian Jeffrey at 714-226-6570 or
myself at 714-226-8687.

 

	
  Sincerely,

  
	
   

  
	
   

  
	
  /s/ Aimee Ward

  	
   

  
	
  Aimee Ward

  
	
  Contract Manager I

  

 

4

 

ACKNOWLEDGED
AND AGREED:

 

	
  For
  Medical Group

  	
  For PacifiCare of California

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Michael
  Olson

  	
   

  	
  By:

  	
  /s/ Brian
  Jeffrey

  	
   

  
	
   

  	
  Name:

  	
  Michael
  Olson

  	
   

  	
   

  	
  Name:

  	
  Brian
  Jeffrey

  
	
   

  	
  Title:

  	
  Contracting/Network Development Director

  	
   

  	
   

  	
  Title:

  	
  VP,
  Network Management 

  
	
   

  	
  Date:

  	
  11/18/02

  	
   

  	
   

  	
  Date:

  	
   

  	
  11/21/02

  	
   

  
												

 

5

 

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 1

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

 

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

 

1.3                                 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.

 

1.4                                 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.

 

1.5                                 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.

 

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.

 

6

 

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                                 Age/Gender/Benefit Adjusted Commercial
Capitation.  Capitation Payments for Commercial Plan
Members shall be made based upon a per Member per month base capitation rate
(“Base Capitation Rate”) adjusted to reflect the Medical Group Members’ age,
gender, and benefit plan participation. 
The Base Capitation Rate for both Gateway Physicians-United Western
Medical Center (DEC 16210) and Gateway Physicians-Placentia Linda (DEC 16206)
shall be *** per Commercial Plan Member per month.  Age/gender adjustment factors are actuarially determined and are
listed below.  Benefit adjustment
factors are actuarially determined by PacifiCare and may take into
consideration variations in benefit plan types, Copayment and coinsurance
levels.  PacifiCare may change its
benefit adjustment factors as needed to support the differing plan types that
it offers.  On an annual basis,
PacifiCare may modify the benefit adjustment factors based on actuarially
determined changes.  The Standard
Service Capitation Amount will vary during subsequent months as a result of
changes in the age, gender, and benefit plan participation of the Medical
Group’s Members for the applicable month. 
The total monthly Capitation Payment shall also be adjusted in the
manner set forth in Article 5 of the Base Agreement.

 

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

 

 

	
  Gender

  	
   

  	
  Age Band

  	
   

  	
  Physician

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  C

  	
   

  	
  00-00

  	
   

  	
  1.8412

  
	
  C

  	
   

  	
  01-01

  	
   

  	
  1.1116

  
	
  C

  	
   

  	
  02-09

  	
   

  	
  0.4434

  
	
  C

  	
   

  	
  10-17

  	
   

  	
  0.4411

  
	
  F

  	
   

  	
  18-19

  	
   

  	
  0.6649

  
	
  F

  	
   

  	
  20-24

  	
   

  	
  0.9544

  
	
  F

  	
   

  	
  25-29

  	
   

  	
  1.3620

  
	
  F

  	
   

  	
  30-34

  	
   

  	
  1.3911

  
	
  F

  	
   

  	
  35-39

  	
   

  	
  1.3147

  
	
  F

  	
   

  	
  40-44

  	
   

  	
  1.3872

  
	
  F

  	
   

  	
  45-49

  	
   

  	
  1.5017

  
	
  F

  	
   

  	
  50-54

  	
   

  	
  1.7097

  

 

7

 

	
  F

  	
   

  	
  55-59

  	
   

  	
  1.9981

  
	
  F

  	
   

  	
  60-64

  	
   

  	
  2.2818

  
	
  F

  	
   

  	
  65 and Over

  	
   

  	
  1.9375

  
	
  M

  	
   

  	
  18-19

  	
   

  	
  0.3840

  
	
  M

  	
   

  	
  20-24

  	
   

  	
  0.3787

  
	
  M

  	
   

  	
  25-29

  	
   

  	
  0.4805

  
	
  M

  	
   

  	
  30-34

  	
   

  	
  0.6052

  
	
  M

  	
   

  	
  35-39

  	
   

  	
  0.6675

  
	
  M

  	
   

  	
  40-44

  	
   

  	
  0.8186

  
	
  M

  	
   

  	
  45-49

  	
   

  	
  1.0095

  
	
  M

  	
   

  	
  50-54

  	
   

  	
  1.3110

  
	
  M

  	
   

  	
  55-59

  	
   

  	
  1.7451

  
	
  M

  	
   

  	
  60-64

  	
   

  	
  2.1970

  
	
  M

  	
   

  	
  65 and Over

  	
   

  	
  2.0813

  

 

3.1.1                        PacifiCare guarantees that the Medical Group
will receive a Minimum Capitation Guaranty per Commercial Health Plan Member
per month, for the provision of Medical Services.  In exchange for this minimum guaranty, the parties have also
agreed to establish a Maximum Capitation Guaranty.  The program shall only apply to calendar year 2003.  The guaranty (the “Minimum/Maximum
Capitation Guaranty Program”) is described further as follows:

 

For the period January 1, 2003, to December 31, 2003 only,
the Medical Group Minimum Capitation Guaranty shall be *** per Member per month
(“Minimum Capitation Guaranty”) and the maximum payment shall be limited to ***
per Member per month (“Maximum Capitation Guaranty”). The capitation guaranty
shall be based on a flat per Member per Month amount, not adjusted for age/sex
benefit plan factors.

 

If the Average Capitation Amount per Member per month for Medical
Group, calculated as set forth below, is less than the Minimum Capitation
Guaranty, PacifiCare shall pay the Medical Group the difference.  If the average Capitation Amount per Member
per month exceeds the Maximum Capitation Guaranty, the Medical Group shall pay
PacifiCare the difference.  Such
payments shall be made at the times and in the manner described below.  The Minimum/Maximum Capitation Guaranty
Program shall be calculated and applied prior to any other adjustments pursuant
to the Agreement.

 

Calculation of the Minimum/Maximum Capitation Guaranty Program will be
based on the “Standard Service Capitation Amounts” shown on the monthly
capitation report for the applicable calendar quarter(s) inclusive of
adjustments for retroactive changes in Membership, but excluding all other
adjustments to Capitation Payments (the “Average Capitation Amount”).  The Standard Service Capitation amount(s)
shall be divided by the total Member months for the period and compared with
the Minimum Capitation Guaranty and Maximum Capitation Guaranty for the
applicable period.  PacifiCare shall
determine whether any payments are due under the Minimum/Maximum Capitation
Guaranty Program within forty-five (45) calendar days after the end of each
calendar

 

8

 

quarter for the first three quarters of calendar year 2003, with a
final calculation as provided below.

 

If amounts are due to the Medical Group, PacifiCare will provide
payment thirty (30) days after the calculation is due (i.e. 75 days after the
calendar quarter).  If amounts are due
to PacifiCare, PacifiCare will deduct such amount from the Capitation Payment
of the Medical Group in the month following provision of the calculation (i.e.
if the calculation is provided on November 15th, the deduction will be
taken from the Capitation Payment due on December 10th). If amounts are
due to Medical Group, PacifiCare will make the payment on the fifteenth (15th)
calendar day of the month following the provision of the calculation.

 

A final, aggregated, year-end settlement will be determined by
PacifiCare on September 15, 2004, based on a calculation for the entire
calendar year 2003.  If amounts are due
to the Medical Group, PacifiCare will provide payment by October 15,
2004.  If amounts are due to PacifiCare,
PacifiCare will deduct such amount from the October 10, 2004, Medical
Group Capitation Payment.  If the
Agreement is terminated prior to the final year-end settlement timeframes as
specified in this Section, then the final settlement will be settled in the
manner described at 6.6, Repayment Upon Termination.

 

Example:

 

Calendar Yr 2003 Quarter Average PMPM Calculation Due Date
Paid/Recovered

	
  Ql

  	
   

  	
  Avg
  for Ql

  	
   

  	
  May
  15, 2003

  	
   

  	
  June 15
  (pd) June 10 (recovered)

  
	
  Q2

  	
   

  	
  Avg.
  for Ql-Q2

  	
   

  	
  Aug.
  15, 2003

  	
   

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

  
	
  Q3

  	
   

  	
  Avg.
  for Ql-Q3

  	
   

  	
  Nov.
  15, 2003

  	
   

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

  
	
  Q4

  	
   

  	
  Avg.
  for Q1-Q4

  	
   

  	
  Feb.
  15, 2004

  	
   

  	
  March 15
  (pd) March 10 (recovered)

  

2003 Year-end Settlement Avg. for Q1-Q4, adjusted for retroactivity

Sept. 15, 2004 Oct. 15, 2004 (pd) Oct. 10, 2004 (recovered)

 

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.

 

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 and no
cents ($0.00) per Commercial Plan Member per calendar year.

 

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

 

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

 

9

 

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 5.6.5 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 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 at the Cost of Care
as defined in this Agreement.  The
Reinsurance Deductible, Reinsurance Premium and Reinsurance Coinsurance for the
Commercial Plan shall initially be:

 

(i)                                     Reinsurance Deductible shall be fifty
thousand dollars ($50,000) per Commercial Plan Member per calendar year.

 

(ii)                                  Reinsurance Premium shall be six and
ninety-six tenths percent (6.96%) of Commercial Plan Premium.

 

(iii)                               Reinsurance Coinsurance shall be fifty
percent (50%) of the Cost of Care for amounts in excess of the Reinsurance
Deductible but less than two hundred fifty thousand dollars ($250,000) and
twenty percent (20%) of the Cost of Care for amounts in excess of two hundred
fifty thousand dollars ($250,000).

 

3.3.2                        CHIP Budget.  The CHIP Budget for
Commercial Plan Members shall be established based upon a per Member per month
rate (“Base Rate”) adjusted to reflect the Assigned Medical Group Members’ age,
gender, and benefit plan participation. 
The Base Rate for both Gateway Physicians-United Western Medical Center
(DEC 16210) and Gateway Physicians-Placentia Linda (DEC 16206) shall be ***
(***) per Commercial Plan Member per month. 
Age/gender adjustment factors are actuarially determined by PacifiCare
and are listed below.  Benefit
adjustment factors are actuarially determined by PacifiCare and take into
consideration variations in benefit plan types, Copayment and coinsurance
levels.  PacifiCare may change its
benefit adjustment factors as needed to support the differing plan types that
it offers.  On an annual basis,
PacifiCare may modify the benefit adjustment factors based on actuarially
determined changes.  The CHIP Budget
will vary during subsequent months as a result of changes in the age, gender,
and benefit plan participation of the Assigned Medical Group Members for the
applicable month.

 

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

 

10

 

	
  Gender

  	
   

  	
  Age Band

  	
   

  	
  Hospital

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  C

  	
   

  	
  00-00

  	
   

  	
  4.0488

  
	
  C

  	
   

  	
  01-01

  	
   

  	
  0.7234

  
	
  C

  	
   

  	
  02-09

  	
   

  	
  0.3228

  
	
  C

  	
   

  	
  10-17

  	
   

  	
  0.3706

  
	
  F

  	
   

  	
  18-19

  	
   

  	
  0.5841

  
	
  F

  	
   

  	
  20-24

  	
   

  	
  0.9398

  
	
  F

  	
   

  	
  25-29

  	
   

  	
  1.4088

  
	
  F

  	
   

  	
  30-34

  	
   

  	
  1.3551

  
	
  F

  	
   

  	
  35-39

  	
   

  	
  1.1025

  
	
  F

  	
   

  	
  40-44

  	
   

  	
  1.0464

  
	
  F

  	
   

  	
  45-49

  	
   

  	
  1.1741

  
	
  F

  	
   

  	
  50-54

  	
   

  	
  1.4581

  
	
  F

  	
   

  	
  55-59

  	
   

  	
  2.0324

  
	
  F

  	
   

  	
  60-64

  	
   

  	
  2.4463

  
	
  F

  	
   

  	
  65 and Over

  	
   

  	
  2.2225

  
	
  M

  	
   

  	
  18-19

  	
   

  	
  0.4431

  
	
  M

  	
   

  	
  20-24

  	
   

  	
  0.4520

  
	
  M

  	
   

  	
  25-29

  	
   

  	
  0.5000

  
	
  M

  	
   

  	
  30-34

  	
   

  	
  0.5081

  
	
  M

  	
   

  	
  35-39

  	
   

  	
  0.6558

  
	
  M

  	
   

  	
  40-44

  	
   

  	
  0.8823

  
	
  M

  	
   

  	
  45-49

  	
   

  	
  1.1058

  
	
  M

  	
   

  	
  50-54

  	
   

  	
  1.5844

  
	
  M

  	
   

  	
  55-59

  	
   

  	
  2.2785

  
	
  M

  	
   

  	
  60-64

  	
   

  	
  3.0045

  
	
  M

  	
   

  	
  65 and Over

  	
   

  	
  2.9368

  

 

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

 

11

 

v)                                     Any and all amounts received from third
parties for Hospital 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, not to exceed ***

*** per Commercial Plan Member per month.

*** 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 *** 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 Threshold shall be calculated using several factors,
included trended 2002 calendar year and ongoing actual performance for Medical
Group, inflationary trends and benefit adjustments.  Effective January 1, 2003, the PIP Threshold shall be ***
per Commercial Plan Member per month. 
The PIP Threshold shall be re-calculated yearly and PacifiCare shall
notify Medical Group of the new PIP

 

12

 

Threshold by sixty (60) calendar days prior to the anniversary date.

 

3.4.5                        PIP Surplus.  Medical Group shall
participate in the Pharmacy Upside Sharing Program.  In the event the PIP Expense is less than the PIP Threshhold
during the 2003 calendar year, the amount of this difference will be referred
to as the PIP Surplus.  In  this event, fifty percent (50%) of the
surplus shall be allocated to Medical Group. 
This PIP shall be settled on a quarterly basis beginning with the second
quarter of the 2003 calendar year and ongoing within ninety (90) days of the
end of the quarter.  Quarterly payouts
will be subject to an IBNR adjustment. 
There will be a final, cummulative settlement produced within one hundred
eight (180) days of the 2003 calendar year.

 

3.4.6                        PIP Deficit.  In the event that the PIP
Expense is greater than the PIP Budget, zero percent (0%) of the deficit shall
be allocated to Medical Group.

 

3.4.7                        Pharmacy Management Programs. 
Medical Group shall continue its Pharmacy Management Programs.  PacifiCare’s Clinical Pharmacist will
continue to work with Medical Group to identify performance improvement
opportunities.  Medical Group shall work
cooperatively with PacifiCare’s Clinical Pharmacist and participate in
PacifiCare’s Pharmacy Management Initiatives, as applicable.

 

3.4.8                        Annual Review.  The
PIP shall be adjusted annually to reflect changes, including Pharmacy expenses,
inflation, benefit plans and drug management programs.

 

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

 

 

	
   

  	
  PACIFICARE
  OF CALIFORNIA

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Brian Jeffrey

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  
	
   

  	
  Date:

  	
  11/21/02

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MEDICAL
  GROUP

  GATEWAY PHYSICIANS MEDICAL

  ASSOCIATES

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Michael Olson

  
	
   

  	
   

  	
  Michael Olson

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  Contracting/Network Development Director

  
	
   

  	
   

  
	
   

  	
  Date:

  	
  11/18/02

  

 

13

 

PRODUCT ATTACHMENT B

PACIFICARE COMMERCIAL POINT-OF-SERVICE PLAN

 

In
addition to the terms and conditions set forth in the Base Agreement and
Product Attachment A, the following terms and conditions, as defined below, are
also applicable to the PacifiCare Commercial Point-of-Service Plan.

 

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

 

1.2                                 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.

 

1.3                                 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.

 

1.4                                 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.

 

1.5                                 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.

 

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.

 

2.1                                 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

 

14

 

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 eighty five percent (85%) of the monthly Standard
Service Capitation Amount 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. 
The payment described in this Section is payment in full for
In-Network Services, except for Copayments, coordination of benefits and third
party recoveries.

 

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.

 

3.2                                 Commercial POS Control Program. 
Effective January 1, 2003, the Commercial POS Control Program is
discontinued.  Therefore, this
Section 3.2 [Commercial POS Control Program] is hereby deleted and the
numbering reserved for future use.

 

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.

 

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

 

 

	
   

  	
  PACIFICARE
  OF CALIFORNIA

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Brian Jeffrey

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  
	
   

  	
  Date:

  	
  11/21/02

  

 

15

 

	
   

  	
  MEDICAL
  GROUP

  GATEWAY PHYSICIANS MEDICAL

  ASSOCIATES

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Michael Olson

  
	
   

  	
   

  	
  Michael Olson

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  Contracting/Network Development Director

  
	
   

  	
   

  
	
   

  	
  Date:

  	
  11/18/02

  

 

16

 

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                                 CMS Agreement is the Medicare + Choice contract between
PacifiCare and CMS.

 

1.2                                 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.

 

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

 

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

 

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

 

1.6                                 Secure Horizons Revenue is the Monthly CMS Payment for Medical Group
Members enrolled in the Secure Horizons Health Plan, less payments for
broker and agent commissions/compensation (when applicable), amounts paid for
certain third parties for services provided in connection with the
identification and enrollment of individuals who can be designated as Specified
Low-Income Beneficiaries eligible for the Qualified Medicare Beneficiary
Program, and premium taxes.

 

ARTICLE 2

DUTIES OF MEDICAL GROUP

 

2.1                                 Compliance with CMS Agreement and Federal
Medicare Law.  Medical Group shall comply with all
requirements in the CMS 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 CMS 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 CMS Agreement
shall be made available to Medical Group concurrent with the execution of this
Agreement.

 

17

 

Medical Group and its Participating Providers
shall comply with title XVIII of the Social Security Act and the regulations
adopted thereunder by CMS 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
CMS.

 

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 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 CMS 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.

 

18

 

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:

 

*** Medical Group

*** to PacifiCare

 

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, not to exceed ***

*** per Secure Horizons Plan Member per month.

*** 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.

 

3.3.7                        One Time Adjustment for 2003 Increases in
Secure Horizons Revenue.  The Capitation Percentage set forth above
assumes a prospective Secure Horizons Revenue increase effective as of
January 1, 2003, of no greater than *** over the average Secure Horizons
Revenue for Assigned Medical Group Members for calendar year 2002 (the “Annual
Increase”).  In the event that the
actual Annual Increase is more than two percent (2%), as determined by law or
legislative or regulatory action or federal administrative agency
interpretation no later than December 31, 2002 (as calculated by
PacifiCare for Assigned Medical Group Members) the increase shall be used to
enhance market competitiveness and/or improve Secure Horizons Plan benefits.  PacifiCare shall reduce the Capitation
Percentage to an amount that will adjust Medical Group’s Standard Service
Capitation Payments to reflect the *** agreedlimit on the Annual Increase in Secure Horizons Revenue under this
Agreement.  The  resulting adjustment, if any, in the
Capitation Percentage shall begin with the January 2003 Standard Service
Capitation Payment.

 

3.4                                 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.

 

21

 

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

 

	
   

  	
  PACIFICARE
  OF CALIFORNIA

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Brian Jeffrey

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  
	
   

  	
  Date:

  	
  11/21/02

  
	
   

  	
   

  
	
   

  	
  MEDICAL
  GROUP

  GATEWAY PHYSICIANS MEDICAL

  ASSOCIATES

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Michael Olson

  
	
   

  	
   

  	
  Michael
  Olson

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  Contracting/Network Development Director

  
	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
  11/18/02

  

 

22

 

PACIFICARE OF CALIFORNIA

 

MEDICAL GROUP/IPA SERVICES AGREEMENT

(PROFESSIONAL CAPITATION)

 

EXHIBIT 1

MEDICAL GROUP FACILITIES AND HOSPITAL(S)

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

 

Medical
Group Facilities:

 

Gateway
Physicians Medical Associates—United Western Medical Center

Commercial and Secure Horizons Health Plan

 

Gateway
Physicians Medical Associates—Placentia Linda

Commercial Health Plan Only

 

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):

Western
Medical Center

Placentia
Linda Hospital

 

Medical
Group Service Area:

 

The
Medical Group Service Area is the geographic area served by the Medical Group’s
Participating Providers, including referral providers.  The Medical Group Service Area is defined as
being within a thirty (30) mile radius of each of the Medical Group Facilities,
and includes the facilities and physician offices beyond the thirty mile radius
where Referral Services are arranged for by Medical Group.  The Medical Group Service Area shall be
determined by PacifiCare, based upon the shortest route using public streets
and highways.

 

23

 

PACIFICARE
OF CALIFORNIA

 

MEDICAL GROUP IPA SERVICES AGREEMENT

(PROFESSIONAL CAPITATION)

 

EXHIBIT 4

ATTACHMENT A

 

NATIONAL
PROVIDER TRANSPLANT NETWORK

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

 

Division
of Financial Responsibility.  The Division of Financial
Responsibility (DFR), attached to this Agreement as Exhibit 4, shall serve as
the specific designation of financial risk for the Medical Group, Hospital
Incentive Programs and PacifiCare for Transplant Services (other than skin or
ophthalmic transplants, which are addressed separately in the DFR):

 

I.                                         Designated NPTN Components
(Phases) of Care—General

 

Transplant Services are generally described in the following components
of care:

 

•                                          Transplant Evaluation

•                                          Transplant Candidacy and Maintenance

•                                          Transplant Procedure and Procurement

•                                          Post-Transplant Follow-up (Year 1)

•                                          Post-Transplant Follow-up (Years 2-5)

 

II.                                     Transplant Services Phases
of Care Definitions and Service Components.

 

1.                                       SOLID ORGAN
TRANSPLANTATION.  The solid organ Transplant Services are segregated
into the following components:

 

a)                                      TRANSPLANT EVALUATION PHASE.  Pre-transplant medically necessary services
required to assess and evaluate the Member to determine acceptance to
transplant program.  This phase ends
upon acceptance or denial into the transplant program.  This Phase shall include:

 

•                  Consultation
with surgeon(s), psychiatrist(s), specialist(s), transplant coordinator(s),
social services.

 

•                  Hematology,
blood banking, serology, chemistry, histocompatibility.

 

•                X-rays,
pulmonary function tests, skin tests, leukopheresis consultation, CT scan,
tissue typing, MRI.

 

•                Inpatient
or outpatient, including professional, room and board, nursing, pharmacy and
all other ancillary services.

 

b)                                     TRANSPLANT CANDIDACY AND MAINTENANCE PHASE:
Services necessary to assess referral for formal evaluation for Transplant
Services and Medically Necessary inpatient and/or

 

28

 

outpatient
services, in order to maintain the Member’s health prior to a transplant.

 

c)                                      TRANSPLANT PROCEDURE AND PROCUREMENT
PHASE.  Transplant related services from
the day before a transplant is performed through discharge.  Includes all hospital, physician, ancillary,
transportation, acquisition costs and other services necessary to acquire a
cadaver or living transplantable human organ for transplantation into
designated Member.  This Phase includes
retransplantation.  This Phase includes:

 

•                  Inpatient
or outpatient, including professional, room and board, nursing, pharmacy and all
other ancillary services for recipient and living donor

 

•                  Surgical
transplant and other surgical procedures during admission

 

•                  Organ
and tissue procurement and transportation costs related to procurement

 

•                  Donor
testing and identification and preparation or organ and tissue

 

d)                                     POST-TRANSPLANT FOLLOW-UP (YEAR 1).  Transplant- related Medically Necessary
services rendered to recipient for follow-up for up to 365 days post discharge
for recipient and 90 days post discharge for living donor.  This Phase includes:

 

•                   Inpatient or outpatient, including professional, room and board,
nursing, pharmacy and all other ancillary services for recipient and donor.

 

•                   Readmissions related to transplant complications

 

•                   Transplant rejection diagnosis and treatment

 

•                   Transplant related complications (medical care necessary related
directly to transplant or re-transplantation)

 

e)                                                                                      POST-TRANSPLANT FOLLOW-UP (YEARS 2-5).  Transplant-related Medically Necessary
services provided after the post-transplant follow-up period described above.

 

2.                                       AUTOLOGOUS HEMOPOETIC STEM
CELL TRANSPLANTATION.  The autologous hemopoetic stem cell
Transplant Services are segregated into the following components:

 

a)                                      TRANSPLANT EVALUATION PHASE.  Begins with initial consult with transplant
physician through day prior to myeoloblative or immunoablative therapy
beginning.  This phase ends upon
acceptance or denial into the transplant program.  The Evaluation Phase shall include:

 

•                  Consultation
with transplant physician(s), psychiatrist(s), specialist(s), transplant
coordinator(s), social services.

 

•                  Hematology,
blood banking, serology, chemistry, histocompatibility.

 

29

 

•                  X-rays,
pulmonary function tests, skin tests, leukopheresis consultation, CT scan,
tissue typing, MRI.

 

•                  Restaging
of disease

 

•                  Inpatient
or outpatient, including professional, room and board, nursing, pharmacy and
all other ancillary services.

 

•                  IV
or oral medications for mobilization

 

•                  Bone
marrow harvest/stem cell collection

 

•                  Stem
cell cryopreservation and storage

 

b)                                     TRANSPLANT CANDIDACY AND MAINTENANCE
PHASE.  Services necessary to assess
referral for formal evaluation for Transplant Services and Medically Necessary
inpatient and/or outpatient services, in order to maintain the Member’s health
prior to transplant.

 

c)                                      TRANSPLANT PROCEDURE PHASE.  From day myeoloblative or immunoablative
therapy begins through discharge.

 

•                  Inpatient
or outpatient, including professional, room and board, nursing, pharmacy and
all other ancillary services for recipient.

 

•                  Marrow
ablative or immunoablative therapy (total body irradiation and/or chemotherapy)

 

•                  Marrow
or cord acquisition

 

•                  Transplant

 

d)                                     POST-TRANSPLANT FOLLOW-UP (YEAR 1).  Transplant related Medically Necessary
services rendered to recipient for follow-up for up to 365 days post discharge.

 

•                  Inpatient
or outpatient, including professional, room and board, nursing, pharmacy and
all other ancillary services for recipient.

 

•                  Transplant
physician visits

 

•                  Laboratory
testing

 

•                  Radiology
exams

 

•                  Retransplantation

 

•                  Readmissions
related to transplant complications

 

30

 

•                  Treatment
for delayed stem cell engraftment (GCSF)

 

•                  Transplant
related complications (medical care necessary related directed to transplant or
re-transplantation)

 

3.                                       ALLOGENEIC HEMOPOETIC STEM
CELL TRANSPLANTATION (Related or Unrelated).  The allogenic hemopoetic stem
cell Transplant Services are segregated into the following components:

 

a)                                      TRANSPLANT EVALUATION PHASE.  Pre-transplant Medically Necessary Services
required to assess and evaluate the Member to determine acceptance to the
transplant program.  This phase ends
upon acceptance or denial into the transplant program.  This Phase shall include:

 

•                  Consultation
with transplant physician(s), psychiatrist(s), specialist(s), transplant
coordinator(s), social services.

 

•                  Hematology,
blood banking, serology, chemistry, histocompatibility

 

•                  X-rays,
pulmonary function tests, skin tests, leukopheresis consultation, CT scan,
tissue typing, MRI.

 

•                  Restaging
of disease

 

•                  HLA
typing

 

•                  Inpatient
or outpatient, including professional, room and board, nursing, pharmacy and
all other ancillary services.

 

•                  IV
or oral medications for mobilization

 

•                  Bone
marrow harvest/stem cell collection

 

•                  Stem
cell cryopreservation and storage

 

•                  NMDP
or cord bank search

 

•                  NMDP
or cord bank testing of donors

 

b)                                     TRANSPLANT CANDIDACY AND MAINTENANCE
PHASE.  Services necessary to assess
referral for formal evaluation for Transplant Services.  Medically necessary inpatient and/or
outpatient services, in order to maintain the Member’s health prior to
transplant.

 

c)                                      TRANSPLANT PROCEDURE AND PROCUREMENT
PHASE.  From day myeoloblative or
immunoablative therapy begins through discharge.

 

31

 

•                  Inpatient
or outpatient, including professional, room and board, nursing, pharmacy and
all other ancillary services for recipient.

 

•                  Marrow
ablative or immunoablative therapy (total body irradiation and/or chemotherapy)

 

•                  Transplant

 

d)                                     POST-TRANSPLANT CARE.  Transplanted related medically necessary
services rendered to recipient for follow-up for up to 365 days post discharge.

 

•                  Inpatient
or outpatient, including professional, room and board, nursing, pharmacy and
all other ancillary services for recipient.

 

•                  Transplant
physician visits

 

•                  Laboratory
testing

 

•                  Radiology
exams

 

•                  Retransplantation

 

•                  Readmissions
related to transplant complications

 

•                  Transplant
related complications (medical care necessary related directly to transplant or
re-transplantation)

 

•                  Treatment
for GVHD (liver biopsy, hepatic panel, medications)

 

•                  CMV,
PCP, VZV prophylaxis

 

•                  Treatment
for delayed stem cell engraftment

 

4.                                       TRANSPORTATION AND
HOUSING.  Transportation and local housing may be a
Covered Service for NPTN Members.  All
such services must be pre-authorized by PacifiCare’s Case Management
Department.

 

Use
of Defined Terms.  Terms utilized in this Amendment shall have
the same meaning set forth in the definitions to the Agreement.

 

Agreement
Remains in Full Force and Effect.  Except as specifically
amended by this Amendment, the Agreement shall continue in full force and
effect.

 

32

 

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

 

	
   

  	
  PACIFICARE OF CALIFORNIA

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Brian Jeffrey

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  Vice President

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
  11/21/02

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MEDICAL GROUP

  GATEWAY PHYSICIANS MEDICAL ASSOCIATES

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Michael Olson

  	
   

  
	
   

  	
   

  	
  Michael Olson

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  Contracting/Network Development Director

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
  11/18/02

  	
   

  
					

 

33

 

PACIFICARE OF CALIFORNIA

 

MEDICAL GROUP/IPA SERVICES AGREEMENT

(SPLIT CAPITATION)

 

EXHIBIT 5

 

QUALITY INCENTIVE PROGRAM

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

 

1.                                       Introduction.

 

This Exhibit sets forth the terms of a quality incentive program being
implemented by PacifiCare.  The program
is designed to compensate Medical Group for efforts it takes to improve the
quality of services provided to PacifiCare Members as reflected by data
measured by PacifiCare, all as described below (the “Quality Incentive Program”
or the “QIP”).

 

The Quality Incentive Program provides additional compensation to
Medical Groups which are successful in improving and maintaining certain levels
of patient safety, patient satisfaction and quality of care.  The Quality Incentive Program tracks
specific performance measures and calculates payments to the Medical Group
based on aggregating and paying specific amounts for separate performance
measures, as described in this Exhibit.

 

2.                                       Definitions.

 

In addition to other terms defined in this Exhibit or in the Agreement,
the following terms shall have the meanings set forth below:

 

2.1                                 Eligible Membership shall be the monthly Secure Horizons Members
reflected on the PacifiCare Eligibility List for the month preceding the month
in which the applicable QIP Payment will be made.  The determination of Eligible Membership shall not be changed at
any later time to reflect retroactive membership adjustments otherwise made by
PacifiCare in connection with its Managed Care Plans.  Additionally, Eligible Membership shall exclude Members who had
been transferred to Medical Group in a group transfer from another PacifiCare
Participating Provider within six (6) months prior to the date of the
applicable QIP Payment.

 

2.2                                 Leapfrog as used in the Table shall refer to data reported to PacifiCare on the
website maintained by The Leapfrog Group and supplemental data reviewed by
PacifiCare as reported by the California Office of Statewide Health Planning
and Development.

 

2.3                                 Measurement Component shall mean the Measures described in the QIP
Table.

 

2.4                                 Measurement Period is the period for which PacifiCare shall
measure data in order to calculate the applicable QIP Payment.  For the initial and subsequent QIP Payment,
the Measurement Period shall vary as defined in Section 3, QIP Table.

 

34

 

2.5                                 PMPM
Component Payment shall be the amount attributable to each Measurement
Component as specified in the Table and shall be earned by Medical Group only
if Medical Group meets or exceeds the Performance Target for the applicable
Measurement Component.

 

2.6                                 PMPM
Payment Rate shall be the total of the PMPM Component Payments earned by
Medical Group for the applicable Measurement Period.

 

2.7                                 QIP
Payments are the quarterly payments made pursuant to the Quality Incentive
Program.

 

2.8                                 Table
means the table or tables set forth below specifying the Measurement
Components, Performance Targets, Measurement Period, Data Source, Members Measured and PMPM Component Payment.

 

2.9                                 Performance
Target is the performance target for each Measurement Component as defined
in Section 3, QIP Table. 
Performance Targets are determined by the sole discretion of PacifiCare.

 

Members Measured is defined as described in Section 3.  For Measurement Components in which Members
Measured is a combination of Commercial and Secure Horizons membership,
PacifiCare shall perform calculations utilizing a weighted average of the
Commercial and Secure Horizons membership.

 

3.               OIP Table.

 

 

	
  Measure

  	
   

  	
  Performance
  Target

  	
   

  	
  Measurement

  Period

  	
   

  	
  Data
  Source

  	
   

  	
  PMPM
  Component

  Payment

  	
   

  	
  Members Measured

  
	
  Leapfrog Initiative Participation

  	
   

  	
  85% of elective admissions at hospital
  self-reported on Leapfrog website

  	
   

  	
  12 month period ending six months prior to month
  of payout

  	
   

  	
  Leapfrog website

  	
   

  	
  $

  	
  .1258

  	
   

  	
  All Commercial and Secure Horizons assigned to
  PMG

  
	
  CABG volume threshold (per PHS TAG threshold),
  combined with CCMRP risk-adjusted CABG outcomes

  	
   

  	
  85% of CABG admissions at qualifying hospitals
  with >100 CABGs in latest reported year (or per latest OSHPD data
  available) AND NOT CCMRP “Worse Than Expected” outcome status.

  	
   

  	
  12 month period ending six months prior to month
  of payout

  	
   

  	
  Leapfrog website, supplemented by OSHPD data

  	
   

  	
  $

  	
  .1258

  	
   

  	
  All Commercial and Secure Horizons assigned to
  PMG

  
	
  PTCA volume threshold (per PHS TAG threshold)

  	
   

  	
  85% of PTCA admissions at hospitals with >200
  PTCAs in latest reported year (or per latest OSHPD data available)

  	
   

  	
  12 month period ending slix months prior to month
  of payout

  	
   

  	
  Leapfrog website, supplemented by OSHPD data

  	
   

  	
  $

  	
  .1258

  	
   

  	
  All Commercial and Secure Horizons assigned to
  PMG

  

 

	
  Measure

  	
   

  	
  Performance
  Target

  	
   

  	
  Measurement

  Period

  	
   

  	
  Data
  Source

  	
   

  	
  PMPM
  Component

  Payment

  	
   

  	
  Members
  Measured

  
	
  Computerized patient entry

  	
   

  	
  85% of elective admissions at hospitals with
  self-reported compliance on Leapfrog website

  	
   

  	
  12 month period ending six months prior to month
  of payout

  	
   

  	
  Leapfrog website, supplemented by OSHPD data

  	
   

  	
  $

  	
  .1258

  	
   

  	
  All Commercial and Secure Horizons assigned to
  PMG

  
	
  Intensive ICU staffing

  	
   

  	
  85% of elective admissions at hospitals with
  self-reported compliance on Leapfrog website

  	
   

  	
  12 month period ending six months prior to month
  of payout

  	
   

  	
  Leapfrog website, supplemented by OSHPD data

  	
   

  	
  $

  	
  .1258

  	
   

  	
  All Commercial and Secure Horizons assigned to
  PMG

  
	
  PEP-C Project Participation

  	
   

  	
  85% of elective admissions at

  	
   

  	
  2002 Survey

  	
   

  	
  California Health

  	
   

  	
  $

  	
  .1258

  	
   

  	
  All Commercial and

  

 

35

 

	
   

  	
   

  	
  hospitals participating in PEP-C Project

  	
   

  	
   

  	
   

  	
  and Foundation

  	
   

  	
   

  	
   

  	
  Secure Horizons assigned to PMG

  
	
  Breast Cancer screening

  	
   

  	
  70.6% screening performed on members measured

  	
   

  	
  24 month period ending six months prior to
  payment period

  	
   

  	
  PacifiCare Quality Index and Provider Profile

  	
   

  	
  $

  	
  .2265

  	
   

  	
  Females age 52-69

  
	
  Cervical Cancer Screening

  	
   

  	
  51.0% screening performed on members measured

  	
   

  	
  36 month period ending six months prior to
  payment period

  	
   

  	
  PacifiCare Quality Index and Provider Profile

  	
   

  	
  $

  	
  2265

  	
   

  	
  Females age 21 -64

  
	
  Childhood Immunizations

  	
   

  	
  45.0% of recommended Immunizations performed on
  members measured

  	
   

  	
  12 month period ending six months prior to
  payment period

  	
   

  	
  PacifiCare Quality Index and Provider Profile

  	
   

  	
  $

  	
  .2265

  	
   

  	
  Children age 2

  
	
  HgbA Ic Testing- Diabetes

  	
   

  	
  72.0% Testing performed on members measured

  	
   

  	
  12 month period ending six months prior to
  payment period

  	
   

  	
  PacifiCare Quality Index and Provider Profile

  	
   

  	
  $

  	
  .2265

  	
   

  	
  Diabetic members age 31 or older

  
	
  LDL Cholesterol Testing -CAD

  	
   

  	
  71.4% Testing performed on members measured

  	
   

  	
  12 month period ending six months prior to
  payment period

  	
   

  	
  PacifiCare Quality Index and Provider Profile

  	
   

  	
  $

  	
  .2265

  	
   

  	
  Diabetic members age 31 or older

  
	
  Satisfaction with PMG

  	
   

  	
  69.0% overall satisfaction level

  	
   

  	
  2002 Member Satisfaction Survey

  	
   

  	
  PacifiCare Member Satisfaction Survey

  	
   

  	
  $

  	
  .2265

  	
   

  	
  All Commercial and Secure Horizons members
  assigned to PMG

  
	
  Satisfaction with PCP

  	
   

  	
  77.2% overall satisfaction level

  	
   

  	
  2002 Member Satisfaction Survey

  	
   

  	
  PacifiCare Member Satisfaction Survey

  	
   

  	
  $

  	
  .2265

  	
   

  	
  All Commercial and Secure Horizons members
  assigned to PMG

  
	
  Satisfaction with Specialist

  	
   

  	
  73.4% overall satisfaction level

  	
   

  	
  2002 Member Satisfaction Survey

  	
   

  	
  PacifiCare Member Satisfaction Survey

  	
   

  	
  $

  	
  .2265

  	
   

  	
  All Commercial and Secure Horizons members
  assigned to PMG

  
	
  Satisfaction with Referral Process

  	
   

  	
  68.9% overall satisfaction level

  	
   

  	
  2002 Member Satisfaction Survey

  	
   

  	
  PacifiCare Member Satisfaction Survey

  	
   

  	
  $

  	
  .2265

  	
   

  	
  All Commercial and Secure Horizons members
  assigned to PMG

  
	
  PCP Communicates Effectively

  	
   

  	
  63.1% overall satisfaction level

  	
   

  	
  2002 Member Satisfaction Survey

  	
   

  	
  PacifiCare Member Satisfaction Survey

  	
   

  	
  $

  	
  .2265

  	
   

  	
  All Commercial and Secure Horizons members
  assigned to PMG

  

 

4.               Calculation and Payment of OIP Payments.  The
following calculations and payment mechanisms shall apply:

 

(a)                                  Payment Frequency.  QIP
Payments shall be paid to Medical Group quarterly.  The QIP Payments shall be made together with Medical Group’s
Capitation Payment for the months of July 2003, October 2003,
January 2004, and April 2004.

 

(b)                                 Payment Calculation. 
Each quarterly QIP Payment shall equal: the Eligible Membership
multiplied by three (3), the product of which shall be multiplied by the PMPM
Payment Rate.

 

(c)                                  Criteria for Determining OIP Payment
Eligibility.  In order to comprehensively assess Medical
Group’s improvements in the Measurement Components, data on services

 

36

 

provided to both Commercial Health Plan Members and Secure Horizons
Health Plan Members will be measured in connection with the Quality Incentive
Program.  Payments shall be based solely
on Eligible Membership, which only includes Secure Horizons Members.  However, payments for certain Measurement
Components, if earned, shall be made from commercial capitation funds.

 

5.                                       QIP Payments Final. 
PacifiCare’s calculation of the QIP Payment shall be final.  Medical Group recognizes that the
measurement of the QIP data is subject to variation and reasonable statistical
and operational error.  Medical Group
acknowledges that PacifiCare would not be willing to offer the Quality
Incentive Program if PacifiCare’s calculation of the QIP Payments would expose
PacifiCare to increased risk of disputes and litigation arising out of
PacifiCare’s calculation of the QIP Payment. 
Accordingly, in consideration of PacifiCare’s agreement to offer the
Quality Incentive Program to Medical Group, Medical Group agrees that Medical
Group will have no right to dispute PacifiCare’s determination of the QIP
Payment, including determination of any data or the number of Eligible Members.

 

6.                                       QIP Programs for Future Periods. 
PacifiCare in its sole and absolute discretion may implement quality
incentive programs for periods from and after January 1, 2004.  Any such programs shall be on terms
determined by PacifiCare.  PacifiCare
currently intends to provide for a quality incentive program for calendar year
2004.  Until PacifiCare and Medical
Group enter into a written agreement with respect to any such new program for
calendar year 2004, or thereafter, no such program shall be binding upon
PacifiCare.

 

7.                                       Cancellation and Termination of QIP.  The
terms of this Exhibit shall be cancelled and of no effect if Medical Group does
not participate in the Secure Horizons Health Plan as of January 1,
2003.  Additionally, the Quality
Incentive Program shall terminate at such time as Medical Group no longer is
assigned eligible Membership of at least both one thousand (1,000) Commercial
Health Plan Members and one hundred (100) Secure Horizons Health Plan
Members.  In the event of such
termination, the QIP Payments shall be prorated by changing the multiple “3” in
Paragraph 4(b) above to be the number of whole months between the last
quarterly QIP Payment and the month of termination. (Example: Last QIP Payment
is July 2003 and the termination date is September, the “3” in Paragraph
4(b) would be changed to “2”.)

 

8.                                       Effect of Termination of Agreements.  In the event of the termination of the
Agreement, for any reason, no QIP Payments shall be earned or made following
termination of the Agreement.  In the
event that the Medical Group’s participation in the Secure Horizons Health Plan
terminates prior to April 10, 2004 but the Agreement continues to be in effect
and apply to Commercial Health Plan Members, QIP Payments shall continue to be
made through the April 2004 quarterly period, with the QIP Payments to be
made based upon the Eligible Members for the month preceding the effective date
of the termination of the Medical Group’s participation in the Secure Horizons
Health Plan under the Agreement.

 

37

 

	
   

  	
  PACIFICARE OF CALIFORNIA

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Brian Jeffrey

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
  11/21/02

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MEDICAL GROUP

  GATEWAY PHYSICIANS MEDICAL ASSOCIATES

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Michael Olson

  
	
   

  	
   

  	
  Michael Olson

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  Contracting/Network Development Director

  
	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  

 

38

 

PACIFICARE OF CALIFORNIA

 

MEDICAL GROUP/IPA SERVICES AGREEMENT

(PROFESSIONAL CAPITATION)

 

EXHIBIT 4

 

DIVISION OF FINANCIAL RESPONSIBILITY

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

 

The following matrix outlines the Division of Financial Responsibility
(DFR) between PacifiCare, Capitated Medical Group and the Hospital, the intent
being to clarity 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 Manuals for
administrative/operational clarification. 
Member benefit information and eligibility should be verified prior to
the provision of services.

 

Division of Financial Responsibility

 

KEY
M = Opt-out to Medicare benefit for Hospice

 

	
  Service Description

  	
   

  	
  Medical

  Group

  	
   

  	
  Hospital

  Incentive

  Program

  	
   

  	
  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

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  

 

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

 

24

 

Division of Financial Responsibility

 

KEY
M = Opt-out to Medicare benefit for Hospice

 

	
  Service Description

  	
   

  	
  Medical

  Group

  	
   

  	
  Hospital

  Incentive

  Program

  	
   

  	
  PacifiCare

  	
   

  
	
  Diagnostic Test - OP - Fac & Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  DME - IP

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  DME. Ostomy Colostomy Supplies, Prosthetics/Orthotics
  - OP

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Emergency Room - OP - Fac

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Emergency Room - OP - E.R. Phys.

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Endoscopic Studies - IP -

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Endoscopic Studies - OP - Fac

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Endoscopic Studies - OP - Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Family Planning - Abortions - OP - Fac

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Family Planning - Abortions - OP - Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Family Planning - Contraceptive Devices -
  Insertion - OP - Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

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

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Hearing Aids/Molds - OP

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Hearing Screening (Audiologic Evaluation) -
  OP

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Hemodialysis / Dialysis - IP & OP -
  Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Hemodialysis / Dialysis - OP - Fac
  (including all drugs)

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Home Health Care / Homebound Infusion
  Therapy - OP - Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

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

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Hospice Services (Medicare) - IP - Fac & Prof - SH

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Hospice Services - Prof - CO

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Hospitalization Services - IP - Fac

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Immunizations & Inoculations (Medically
  Necessary) - OP

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Infusion therapy - 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

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Lithorripsy - OP - Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

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

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Medication - Prescription - OP

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

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

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  MENTAL HEALTH: AB88 Benefits (Mental Health
  Parity applies to CO only)

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Mental Health - IP & OP - Fac - CO

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Mental Health - IP & OP - Prof - CO

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  

 

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

 

25

 

Division of Financial Responsibility

 

KEY M = Opt-out to Medicare benefit forHospice

 

	
  Service Description

  	
   

  	
  Medical

  Group

  	
   

  	
  Hospital

  Incentive

  Program

  	
   

  	
  PacifiCare

  	
   

  
	
  MENTAL HEALTH: Secure Horizons and
  Commercial (nor, AB88 Benefits)

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Mental Health - IP and OP - Fac - CO

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Mental Health - IP and OP - Fac - SH

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Mental Health - IP and OP - Prof- CO

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Mental Health - IP and 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

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Prostheties - Surgical Implants - OP

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Radiation Therapy - IP & OP - Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Radiation Therapy - OP - Fac and / or
  freestanding facility

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Radiology (Diagnostic Only) - OP - Fac

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  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

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Transplant Candidacy and Maintenance; OP
  and IP Professional

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Transplant Candidacy and Maintenance; OP
  and IP Facility

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Transplant Evaluation (excludes corneal);
  OP and IP Professional. See Note (1).

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Transplant Evaluation (excludes corneal);
  OP and IP Facility. See Note (1).

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Transplant Procedure and Procurement
  (excludes corneal); OP and IP Professional Services. See Note (1).

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Transplant Procedure and Procurement
  (excludes corneal); OP and IP Facility. See Note (1).

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Transplant Related Transportation and
  Housing - NPTN specific benefit. See Note (1).

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Transplant Follow-up (excludes corneal); OP
  and IP Professional; Year I. See Note (1).

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Transplant Follow-up (excludes corneal); OP
  and IP Facility; Year 1. See Note (1)

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Transplant Years 2 - 5 Follow-up (excludes
  corneal); OP and IP Professional

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Transplant Years 2 -5; Follow-up (excludes
  corneal); OP and IP Facility

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Urgent Care - OP - Fac & Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Vision - Medical Treatment - OP - Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

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

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

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

 

26

 

Division
of Financial Responsibility

 

KEY: M = Opt-out to Medicare benefit for Hospice

 

	
  Service Description

  	
   

  	
  Medical

  Group

  	
   

  	
  Hospital

  Incentive

  Program

  	
   

  	
  PacifiCare

  	
   

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

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

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

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  

 

Notes:

 

(1)                                  PacifiCare responsibility
for transplant services is limited to those services defined in this Agreement,
the DFR and Attachment A, Exhibit 4.

 

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

 

27Exhibit
10.192

 

AMENDMENT NUMBER 2 TO

Professional Capitation Medical Group/IPA Services Agreement

 

This Amendment
Number 2 to Professional Capitation Medical Group IPA/Services Agreement] (the
“Amendment”) is entered into effective as of January 1, 2003 by and
between PacifiCare of California, a California corporation (“PacifiCare”), and
Gateway Physicians Medical Associates (“Medical Group”), with respect to the
following facts:

 

RECITALS

 

A.           The parties have previously
entered into that certain Professional Capitation Medical Group/IPA Services
Agreement dated January 1, 2001 (the “Agreement”).

 

B.             The
parties desire to amend the existing agreement, effective January 1, 2003.

 

NOW, THEREFORE, in consideration
of the foregoing, the parties hereto agree that the Agreement is hereby
modified as specified below:

 

1.               The following
Sections of the Agreement are hereby deleted and replaced in their entirety, to
read as follows:

 

ARTICLE 1

DEFINITIONS

 

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 arc required by a Member as determined by Medical
Group, PacifiCare or pursuant to an independent third party review in
accordance with the Member’s Managed Care Plan and PacifiCare’s Quality
Improvement Program and Medical Management Program. Covered Services include,
which services may include experimental services that are either described as
Covered Services in the Subscriber Agreement or are deemed medically necessary
by PacifiCare or the applicable independent external review agent designated in
accordance with applicable State and Federal Law. For purposes of this
Agreement, “medically necessary” shall have the meaning set forth in the
applicable Subscriber Agreement.

 

1.9                                 Division
of Financial Responsibility (DFR) 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.
Experimental services that are Covered Services per the definition above shall
have the financial responsibility described in the DFR. The Division of
Financial Responsibility is an integral part of this Agreement.

 

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

 

1

 

ARTICLE 2

DUTIES OF MEDICAL GROUP

 

2.1                                 Provide Referral Services. With the prior approval of
PacifiCare (except in the case of Emergency Services), Medical Group shall
arrange any necessary Referral Services to PacifiCare’s selection of
Participating Providers for Medical Group Members, which shall be shown on the
PacifiCare’s list of providers of Referral Services. Should Medical Group
direct Referral Services for Members to providers other than those on
PacifiCare’s list of providers of Referral Services and without PacifiCare’s
prior approval, Medical Group understands and accepts that Medical Group may be
responsible for any increased costs to PacifiCare for professional or facility
services not provided in accordance with the foregoing, for amounts during a
calendar year of up to twenty (20%) percent of the Medical Group’s total
capitation payments from PacifiCare. If PacifiCare incurs increased costs for
Covered Services as a result of the foregoing, PacifiCare will provide written
notification to Medical Group of such occurrence and Medical Group agrees that
PacifiCare may deduct the amount of such increased costs from any future
Capitation Payments or amounts otherwise owed to Medical Group under this
Agreement. Furthermore, PacifiCare may determine that such failure constitutes
material breach of this Agreement. Medical Group may address any objection to
PacifiCare’s determination of increased costs according to the Dispute
Resolution Procedures described in this Agreement. Should Medical Group prevail
in any Dispute Resolution Procedure, PacifiCare shall refund the amount of any
overturned deduction to Medical Group within forty-five (45) days following the
resolution of the dispute.

 

Further, PacifiCare shall refund any deductions in excess of
twenty percent (20%) of PacifiCare’s total capitation payments to Medical
Group/Hospital in any single calendar year.

 

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

 

3

 

expiration of the notice period required under this
Section until such time, if any, that 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 in Sections 8.3.3 of this Agreement
pertaining to the provision of Covered Services in Special Circumstances and
shall provide that Medical Group’s Participating Providers shall look solely to
Medical Group for payment for Covered Services provided to Medical Group
Members.

 

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 6.2.2 or in the event of termination
by PacifiCare pursuant to Section 6.3. 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 31,
2003. PacifiCare shall be obligated to pay Medical Group’s Participating
Providers only for such periods as PacifiCare specifically elects, in writing,
to access Medical Group’s subcontracts.

 

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 one hundred and twenty (120) calendar days
from 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.

 

4

 

2.8.2                        Security Reserves.

 

(a)                                  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 Medical Group’s
performance under this Agreement (“Letter of Credit”). The Letter of Credit
shall remain in place for the entire term of this Agreement and until Medical
Group has performed all of it’s obligations under this Agreement.

 

The Letter of Credit shall be in the minimum amount of ***,
which amount shall be adjusted as reasonably determined by PacifiCare from time
to time, and shall be pursuant to an amendment to the Letter of Credit by
Medical Group from PacifiCare, throughout the term of this Agreement (but not
more often than quarterly) to equal] three (3) months of Medical Group’s IBNP
Expenses, as defined below. The parties recognize that the minimum amount set
forth above may not represent Medical Group’s current IBNP Expenses.

 

All the terms and conditions of the Letter of Credit shall
be subject to PacifiCare’s prior written approval. Without limiting the
foregoing, the Letter of Credit shall provide that PacifiCare may draw on the
Letter of Credit by certifying to the issuer that (1) Medical Group is in
default under this Agreement, and has failed to cure such default following
thirty (30) days written notice from PacifiCare; or (2) Medical Group is
Insolvent: or (3) PacifiCare has not received notice from the issuer of
the Letter of Credit that the Letter of Credit is being renewed for the period
required by this Agreement or that Medical Group has not otherwise established
a security reserve acceptable to PacifiCare by a date fourteen (14) days prior
to the expiration date of the Letter of Credit.

 

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 and until Medical Group satisfies all its
financial obligations under this Agreement (“the Letter of Credit Term”).
Should PacifiCare fail to receive notice from the Issuer that the issuer will
not be renewing the Letter of Credit during the Letter of Credit Term and
should Medical Group fail to obtain a replacement Letter of Credit for the
Letter of Credit Term from an issuer acceptable to PacifiCare or otherwise fail
to establish a security reserve acceptable to PacifiCare by a date fourteen
(14) days prior to the expiration date of the Letter of Credit, such failure
shall constitute a material breach of this Agreement and PacifiCare shall be
entitled to draw the entire amount of the Letter of Credit and hold such funds
to pay Medical Group’s obligations under this Agreement. The proceeds of the
Letter of Credit shall be the property of PacifiCare. PacifiCare shall pay
Medical Group the amount of any unused portion of such proceeds after all of
Medical Group’s financial obligations have been satisfied and per the repayment
provisions stipulated in Section 6.6 of this Agreement has been
terminated.

 

Medical Group shall be responsible for any cost, expense, or
administrative fee in connection with the establishment or maintenance of the
Letter of Credit or other security reserve acceptable to PacifiCare.

 

IBNP Expense shall mean all provider liabilities that are
incurred but not paid (IBNP) for PacifiCare Members. Medical Group’s IBNP
liabilities shall include

 

5

 

estimated provider claims that have been incurred but not
paid and provider sub-capitation for periods where PacifiCare has paid
capitation to Medical Group, but Medical Group has not paid capitation to its
capitated Participating Providers.

 

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
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. Medical Group shall cooperate with PacifiCare’s
Participating Providers and PacifiCare Affiliates and agrees to provide Medical
Group Services to Members enrolled in Managed Care Plans and health benefit
plans of Affiliates and to assure reciprocity of health care services. Without
limiting the foregoing, if any Member receives services or treatment
constituting Covered Services from Medical Group or its Participating Providers
and a capitated Participating Provider is financially responsible for such
services, such Participating Provider shall be solely responsible for
compensating Medical Group for such services. Payment by the Participating
Provider shall be at the rates agreed by the Participating Provider and Medical
Group or, if there is no applicable agreement, at the rates provided by
applicable State and Federal Law or, at the election of the Participating
Provider, at the rates set forth in this Agreement, less applicable Copayments,
coinsurance, and/or deductibles, as payment in full for such services or
treatment. The provisions of Section 8.2 [No Billing of Members (Member
Hold Harmless Provision)] shall be binding upon Medical Group regardless of
whether PacifiCare or another capitated Participating Provider is at financial
risk for services provided.

 

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.

 

3.               The following
Sections of the Agreement are hereby amended in their entirety, to read as
follows:

 

ARTICLE 3

ADMINISTRATIVE DUTIES OF PACIFICARE

 

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

 

6

 

Group for any Members in the Medical Group Service Area. At
any time during the term of this Agreement, without terminating this Agreement,
PacifiCare may cease assigning Members to Medical Group.

 

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, or the applicable independent external review agent
designated in accordance with applicable State and Federal Law, shall be
responsible for interpreting the terms of and making final coverage
determinations under the Managed Care Plans.

 

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.

 

3.8                                 Transplant Services. Medical Group acknowledges and
agrees that, at PacifiCare’s direction, transplant services shall be provided
by PacifiCare’s National Preferred Transplant Network Providers, in accordance
with PacifiCare’s Medical Management policies and procedures and the Provider
Manual.

 

3.8.1                        Transplant Services Description. The DFR identifies the risk
arrangements for those transplants and related services, which are the
financial responsibility of PacifiCare. Attachment A, Exhibit 4 provides for a
detailed description of Transplant Services components of care. PacifiCare’s
transplant services financial responsibility is specified in this Agreement’s
DFR and Attachment A, Exhibit 4. Immunosuppressive drugs shall continue to be
covered as specified under the existing pharmacy benefits contained in a
Member’s respective Managed Care Plan.

 

3.8.2                        Medical Management of Transplant
Services.
Medical management for any service related to the evaluation of, actual
transplant of and follow-up care (within contractual time frames) of any solid
organ (except skin and cornea) or transplantation of any bone marrow,
peripheral stem cell or cord blood component shall be the sole responsibility
of PacifiCare. The Provider Manual provides additional guidelines and policies
and procedures governing the management of Transplant Services. Authorization
of the evaluation of the recipient prior to listing for transplantation, the
actual transplant itself, and post transplant care services up to 365 days post
discharge, must be obtained from PacifiCare’s NPTN Medical Director, or his
designee, prior to initiation of services.

 

3.8.3                        Limitation of PacifiCare
Financial Responsibility.
Transplant services provided or arranged by Medical Group that are not prior
authorized by PacifiCare, not coordinated with PacifiCare as provide in this
Section 3.8 and the provider

 

7

 

Manual, performed at a non-NPTN facility, and or as
stipulated in Attachment A, Exhibit 4 shall be the sole financial
responsibility of the Medical Group.

 

3.9                                 PacifiCare-Sponsored Carve-Out
Program Management.
The Division of Financial Responsibility (DFR) Matrix attached to this
Agreement identifies the risk arrangements between Medical Group and
PacifiCare. In specific instances, PacifiCare has assumed financial
responsibility for specific Covered Services, drugs and agents (to include
injectable drugs and adjuncts) that were the previous responsibility of the
Medical Group.

 

PacifiCare has established, at its sole discretion,
specified Carve-Out Programs. Specific Carve-Out Program descriptions, policies
and procedures are provided in Attachments B of Exhibit 4.

 

3.9.1                        PacifiCare’s Right to Modify the
PacifiCare-Sponsored Carve-Out Programs. On a semi-annual basis and or as directed by applicable
law or regulatory requirement(s), and at its sole discretion, PacifiCare
reserves the right to make additions or deletions to the list of Carve-Out
Program Covered Services, drugs and agents. PacifiCare shall provide Medical
Group with 30 days’ advanced notice of such changes. Upon any such change,
PacifiCare shall notify Medical Group of any adjustment to Medical Group’s
compensation resulting from such changes, which adjustment shall be determined
using reasonable actuarial standards, taking into account other changes in
compensation made pursuant to Section 5.1, all as determined by
PacifiCare.

 

3.9.2                        PacifiCare’s Right to Terminate
Medical Group’s Participation in PacifiCare-Sponsored Carve-Out Programs. PacifiCare, at its sole
discretion, reserves the right to terminate Medical Group’s participation in
PacifiCare-Sponsored Carve-Out Programs by providing Medical Group 30 calendar
days advance written notice.

 

ARTICLE 4

MANAGED CARE PROGRAM SERVICES

 

4.2.1                        Delegation Audits and
Determinations.

 

Medical Group’s authority to perform medical management
functions, as described but not limited to Article 4, Section 4.1.2,
may be modified, from time to time, at the sole discretion of PacifiCare.

 

ARTICLE 5

COMPENSATION

 

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

 

8

 

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.

 

Medical Group shall be responsible for assessing the
financial impact that the PacifiCare Sponsored Carve-Out Programs will have on
the Medical Group.

 

5.1.4                        Adjustments For
PacifiCare-Sponsored Carve-Out Programs. Based upon the assumption of financial responsibility by
PacifiCare, PacifiCare shall reduce the Medical Group’s monthly Standard
Service Capitation Payment by the amounts specified in Attachments A and B of
Exhibit 4.

 

5.1.4.1               Limitations to the
PacifiCare-Sponsored Carve-Out Programs. The PacifiCare-Sponsored Carve-Out Programs shall: (a)
cover only the specific medications and Covered Services contained the
Carve-Out Program’s Descriptions and listed in Attachments A and B of
 Exhibit 4, (b) be subject to modification as a result of mandates in
applicable law and or regulatory requirements and (c) apply only to those
specific medications authorized by PacifiCare and provided by PacifiCare’s contracted
vendor(s) for Self-Injectable Carve-Out Program (SICOP) medications. SICOP
medications will be prescribed by Medical Group Participating Providers and
such Participating Providers shall be responsible for all patient education
relating to the applicable prescriptions(s).

 

5.1.4.2               Medical Group’s Failure to
Comply with PacifiCare-Sponsored Carve- Out Programs. If PacifiCare determines that
Medical Group is not complying with the stipulated Carve-Out Program Policies
and Procedures, PacifiCare may terminate the respective Carve-Out Program. Upon
any such termination, PacifiCare shall notify Medical Group of any adjustment
to Medical Group’s compensation, which adjustment shall be determined using
reasonable actuarial standards, taking into account other changes in
compensation made pursuant to this Amendment, all as determined by PacifiCare.

 

In addition to the foregoing, the PacifiCare-Sponsored
Carve-Out Programs and Medical Group’s participation in the Carve-Out Programs
shall be subject to the provisions of PacifiCare’s policies and procedures
applicable to the Carve-Out Programs, copies of which shall be provided to
Medical Group.

 

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

 

9

 

Capitation Payment shall be reduced by the following amounts
:

 

	
  Activity Not Delegated

  	
   

  	
  Amount

  
	
   

  	
   

  	
   

  
	
  Medical Management

  	
   

  	
  Four percent (4.0%) per Commercial Plan Member and four
  percent (4.0%) per Secure Horizons Member per month.

  
	
   

  	
   

  	
   

  
	
  Credentialing

  	
   

  	
  Five-tenths percent (0.5%) per Commercial Plan Member and
  five-tenths percent (0.5%) per Secure Horizons Member per month.

  
	
   

  	
   

  	
   

  
	
  Claims Processing

  	
   

  	
  Three percent (3.0%)
  per Commercial Plan Member and Three percent (3.0%) per Secure Horizons
  Member per month

  

 

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.

 

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 shall establish withholds from Medical Group’s
monthly Capitation Payment for purposes of offsetting potential deficits for
the combined incentive programs administered by PacifiCare, excluding the
Commercial Hospital Incentive Program and the Secure Horizons Hospital
Incentive Program for which separate withholds may be established. The monthly
incentive withhold shall initially be One Dollar ($1.00) per Member per month
of the Standard Service Capitation Amount for the PacifiCare Commercial Health
Plan and five percent (5%) per Member per month for Secure Horizons Health
Plan. PacifiCare, in its sole discretion, shall prospectively adjust the
withhold based on Medical Group’s experience under the combined incentive
programs at the time of the program settlements described below.

 

5.4.2                        Incentive Program Settlements. PacifiCare shall conduct
combined settlements, inclusive of a reserve allowance for incurred but not
reported claims expense, for all of the Managed Care Plan incentive programs
applicable to Medical Group and administered by PacifiCare. Surpluses and
deficits under each of the

 

10

 

incentive programs shall be aggregated and offset against
one another. PacifiCare will conduct a final calculation annually (the “Final
Calculation”) based on the contract calendar year. Payments under the combined
incentive programs will be due from the owing party within one hundred and
eighty (180) days following the end of the contract calendar year for the Final
Calculation. 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. In the event that claims for providers were
incurred during the contract calendar year in question but were not paid until
after the final calculation, such costs shall be carried forward and applied to
the subsequent contract calendar year’s incentive program as an expense for
that contract calendar year. Unless otherwise agreed by the parties in writing,
the Final Calculation shall not bar either party from providing information
reflecting that the Final Calculation should be adjusted, which adjustments may
be requested by either party no later than one year following the end of the
applicable contract calendar year.

 

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
Capitation Payments as a result of any incentive program obligation. 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.

 

5.5.1                        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 ISL 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
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. During each year of this
Agreement, should Medical Group fail to provide PacifiCare with timely evidence
of ISL protection consistent with regulatory requirements, PacifiCare shall
assign such coverage to Medical Group and deduct the then-current ISL Premium
from the Medical Group’s Capitation Payments as further described in each
Product Attachment. For Medical Group

 

11

 

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.

 

5.5.4                        Notification of ISL and
Reinsurance Claims.
Medical Group shall provide written notification to PacifiCare when Medical
Group becomes aware that claims for Medical Group Services or Hospital Services
provided to Medical Group Member(s) equal fifty percent (50%) of the ISL
Deductible or fifty percent (50%) 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 ten percent (10%) of all Medical Group Services or ten percent (10%) 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.

 

5.7                                 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 one hundred percent (100%) 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 under the
Medicare RBRVS Fee Schedule, reimbursement shall be One Hundred Percent (100%)
of the Medicare rate for the current period as released by CMS by
December of the preceding year; (iii) for inpatient and outpatient
Hospital Services, the Cost of Care shall be the lessor of the amount
determined under PacifiCare’s Fee Schedule and paid by PacifiCare or the
prevailing Medicare allowable; (iv) for outpatient pharmaceuticals, to include
injectable drugs and adjuncts, shall be the lesser of billed charges, or the
average wholesale price (AWP) less fifteen percent (15%), or the amount
determined under PacifiCare’s prevailing Fee Schedule and paid by
PacifiCare.

 

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. Medical Group and its Participating Providers shall not refuse to
provide Medical Group Services in the event a Member is unable to pay the
Member’s Copayment except as may be specifically permitted in the Provider
Manual or as approved in advance by PacifiCare.

 

5.11                           Recoupment Rights. PacifiCare shall have the
right, but not the obligation, to pay claims which Medical Group fails to pay
for Covered Services provided to PacifiCare Members if Medical Group fails to
pay such claims following ten (10) days written notice from

 

12

 

PacifiCare. Except as may otherwise be specifically provided
in this Agreement, PacifiCare shall have the right to immediately recoup any
and all amounts owed by Medical Group to PacifiCare against amounts, including
Capitation Payments, owed by PacifiCare to Medical Group. 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 for
Covered Services provided outside the Medical Group Service Area; (iv) amounts
owed by Medical Group as a result of the outcome of the Member appeals and
grievance procedure; (v) amounts owed by Medical Group in connection with any
other prior or existing agreement between Medical Group and PacifiCare or any
PacifiCare Affiliate and (vi) amounts owed by Medical Group pursuant to
Section 5.4.2 (Incentive Program Settlements) above.. 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. Except for those instances
specified in Sections 5.16 and 5.17 above, 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.
PacifiCare shall have the right, but not the obligation, to pay claims which
Medical Group fails to pay for Covered Services provided to PacifiCare Members.
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.

 

5.14                           Last Month’s Capitation. In the event of termination of
this Agreement, PacifiCare may withhold from Medical Group’s last month’s
Capitation Payment an amount reasonably estimated by PacifiCare to equal the
amount Medical Group owes to PacifiCare pursuant to the terms of this Agreement
and for which PacifiCare does not have reserves or financial assurances.

 

5.15                           Payments which are the
Responsibility of Capitated Providers. Medical Group acknowledges and agrees that if Medical Group
is, now or hereafter, a party to any subcontract or other agreement with
PacifiCare Participating Providers who receive

 

13

 

capitation and are responsible for arranging for Covered
Services through their sub-contractual arrangements (“Capitated Providers”),
that Medical Group shall look solely to the applicable Capitated Provider, and
not PacifiCare, for payment for Covered Services provided to PacifiCare Members
that are covered by PacifiCare’s agreements with such Capitated Providers.

 

5.16                           Non-Capitated Services
Submission of Claims/Claims Payment. Medical Group shall submit all claims for non-capitated
services reimbursement under this Agreement (including claims for interest) to
PacifiCare no later than sixty (60) calendar days from the date of service or,
if a third party or Coordination of Benefits claim, upon receipt of payment or
notice of denial from a primary payor. Medical Group shall submit such claims
in accordance with the procedures and standards established by PacifiCare. If
Medical Group elects to submit claims electronically to PacifiCare, such
electronic format shall be acceptable to PacifiCare or its agent.

 

Medical Group acknowledges and agrees that if Medical Group
fails to submit claims as specified by this Section, PacifiCare reserves the
right to deny payment for such claims. For each Clean Claim submitted by
Medical Group, PacifiCare or the applicable Payor shall pay the amount due to
Medical Group within sixty (60) business days following receipt of a Clean
Claim by PacifiCare and in accordance with applicable State and Federal Law for
the applicable Managed Care Plan. For purposes of this Section, a “Clean Claim”
is a claim for Covered Services submitted by Medical Group which is complete
and includes all the information reasonably required by PacifiCare, and as to
which request for payment there is no material issue regarding PacifiCare’s
obligation to pay under the terms of a Managed Care Plan or PacifiCare’s MM
Program. In the event it is determined that a claim is not a Clean Claim,
PacifiCare shall, within the time frames set forth above for the payment of
Clean Claims, use reasonable efforts to advise Medical Group of the basis upon
which a claim is not eligible for payment and specify any additional
information required for PacifiCare to pay the amount due with respect to the
applicable claim.

 

Medical Group acknowledges and agrees that payors are solely
responsible for payment to Medical Group for non-capitated Covered Services
provided to Members of payor plans whether claims are submitted to and paid by
Payor directly or by PacifiCare on behalf of payor. PacifiCare shall not be
responsible or liable for any claims decisions or for any payment of claims by
payors.

 

5.17                           Timely Submission of Medical
Group Requests for Claims Payment Reconsideration. Pursuant to Section 7.5
of this Agreement and in accordance with the provisions set forth in the
Provider Manual, Provider/Hospital may dispute any claims payment by PacifiCare
described in Section 5.11. Medical Group requests for reconsideration of a
claims payment must be forwarded, in writing, to PacifiCare within sixty (60)
working days from receipt of applicable claims payment from PacifiCare. Medical
Group’s failure to submit written requests as specified in this
Section 5.12 shall result in the request being denied by PacifiCare, and
no further action may be taken by Medical Group.

 

5.18                           Timely Submission of Medical
Group Requests for Recoupment Reconsideration for Recoupment Actions Initiated
by PacifiCare.
Pursuant to Section 7.5 of this Agreement and in accordance with the
provisions set forth in the Provider Manual, Medical Group may dispute any
recoupment action by PacifiCare described in Section 5.17 above. Medical
Group requests for reconsideration of recoupment actions initiated by
PacifiCare

 

14

 

must be received in writing by PacifiCare within ninety (90)
working days from receipt of the Notice of Intent to Recoup from PacifiCare.
Medical Group’s failure to submit written requests as specified in this
Section 5.18 shall result in the request being denied by PacifiCare, and
no further action may be taken by Medical Group.

 

5.19                           PacifiCare Quality Incentive
Program. PacifiCare’s
Quality Incentive Program (“QIP”) is a bonus program which recognizes
PacifiCare Participating Providers who have statistically demonstrated sound
clinical care practice, quality-focused provision or arrangement of Covered
Services on behalf of their assigned PacifiCare Members and demonstrated
superior customer satisfaction. Exhibit 5 of this Agreement describes the QIP.
The terms of Exhibit 5 reflect PacifiCare’s participation in the “pay for
performance” initiative of the Integrated Healthcare Association.

 

ARTICLE 6

TERM AND TERMINATION

 

6.2.1                        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 and PacifiCare’s failure to make such payment within the cure period
provided at Section 6.2.3, below.

 

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

 

(v)                                 Change in Hospital Agreement. In addition to other
provisions of the Agreement, PacifiCare may terminate this Agreement in the
event of the termination of the Hospital Services Agreement (“Hospital
Agreement”) between Hospital and PacifiCare pursuant to which Hospital provides
Covered Services to Medical Group Members on a per diem basis or amendment of
the Hospital Agreement to change the compensation methodology of the Hospital
to one based on per diem rates. PacifiCare shall provide Medical Group with
written notice of its intent to terminate this Agreement pursuant to this
Section at least ninety (90) days prior to the effective date of the
termination of this Agreement. The requirements set forth in Section 6.2.3
shall not apply to termination by PacifiCare pursuant to this Section.

 

6.2.3                        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

 

15

 

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 later date as may be specified in such notice. During the Cure
Period, PacifiCare may, and following the termination of this Agreement,
PacifiCare shall cease marketing efforts for Medical Group, discontinue
enrollment of Members with Medical Group and begin transferring Medical Group
Members to other PacifiCare Participating Providers. The continuing care
obligations of Medical Group shall survive the termination of this Agreement.

 

6.6                                 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.
Unless otherwise agreed by the parties in writing, the Final Calculation shall
not bar either party from providing information reflecting that the Final
Calculation should be adjusted, which adjustments may be requested by either
party no later than one year following the end of the applicable contract
calendar year.

 

6.7                                 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.

 

Notwithstanding the foregoing, no party shall be entitled to
punitive damages as a consequence of the other party’s breach of this
Agreement; the non-breaching party’s damages shall be limited to compensatory
damages.

 

6.8                                 Termination of Managed Care Plan. Upon ninety (90) days’ prior
written notice, PacifiCare may terminate the Medical Group’s participation in
any of the Managed Care Plans described in the Product Attachments to this
Agreement. At the end of the ninety (90) day period, PacifiCare may begin
transferring the Members receiving Covered Services pursuant to such Managed
Care Plan. Until such Members are transferred, following the termination date
of the applicable Managed Care Plan, Medical Group shall be obligated to
continue to provide services pursuant to Section 8.3 (the continuing care
provisions) of this Agreement.

 

ARTICLE 7

GENERAL PROVISIONS

 

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

 

16

 

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 rules provide that the parties shall share equally the cost of the
arbitration except that Medical Group shall not be responsible for costs
(excluding attorney fees and expert fees) in excess of the costs of a judicial
proceeding. 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 provided by California law. 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 preliminary injunctive relief or a temporary
restraining order (together “injunctive relief”), such party may initiate an
action for such relief in a court of general jurisdiction in the State of
California. The parties specifically agree that such injunctive relief shall
only be available with respect to matters directly relating to the continued
provision of Covered Services to Members or the acceptance, assignment or
transfer of Members. The decision of the court with respect to the requested
preliminary injunctive relief or temporary restraining order shall be subject
to appeal only as allowed under California law. However, the courts shall not
have the authority to review or grant any request or demand for damages. Each
party shall bear its own attorneys’ fees.

 

Medical Group and PacifiCare
knowingly acknowledge and agree that the foregoing constitutes a waiver of
their constitutional right to a jury trial.

 

ARTICLE 8

GOVERNING LAW AND REGULATORY REQUIREMENTS

 

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

 

17

 

8.7                                 Confidentiality
of Protected Health Information.

 

8.7.1                        Use of
Protected Health Information. Medical Group shall not use or
disclose Protected Health Information (as defined at 45 C.F.R. § 164.504)
for any purpose other than (i) the purposes contemplated by this Agreement;
(ii) as required or allowed under the Health Insurance Portability and
Accountability Act and the regulations promulgated thereunder at 45 C.F.R.
Parts 160 through 164 (collectively, “HIPAA”); or (iii) as otherwise required
by law. In no event may Medical Group use or disclose Protected Health
Information in a manner that violates or would violate HIPAA if such activity
were engaged in by PacifiCare. PacifiCare shall provide copies of relevant
portions of HIPAA to Medical Group upon request.

 

8.7.2                        Safeguards.
Medical Group shall use reasonable efforts to implement and maintain such
operational and technological safeguards as are necessary to ensure that
Protected Health Information relating to Members is not used or disclosed by
Medical Group or by any subcontractors, affiliates, or
business associates of Medical Group except as is provided in this Agreement.

 

8.7.3                        Reporting
of Unauthorized Use or Disclosure. Medical Group shall promptly
report to PacifiCare any use or disclosure of Protected Health Information
received from PacifiCare relating to any Member of which Medical Group becomes
aware that is not provided for or permitted in this Agreement or by HIPAA.
Medical Group shall permit PacifiCare to investigate any such report in
accordance with the provisions of Section 8.7.6.

 

8.7.4                        Use of
Subcontractors. To the extent that Medical Group uses one or more
subcontractors or agents to perform its obligations under this Agreement, and
such subcontractors or agents receive or have access to Protected Health
Information of Members, Medical Group shall cause each such subcontractor or
agent to sign an agreement with Medical Group containing substantially the same
restrictions and conditions related to the protection and confidentiality of
Protected Health Information as those that apply to Medical Group under this
Agreement. In addition, each such contract shall identify PacifiCare as an
intended third party beneficiary with rights of enforcement and indemnification from such
subcontractors or agents in the event of any violations thereof.

 

8.7.5                        Access
to and Correction of Information: Disclosure Records.
Medical Group shall permit PacifiCare Members timely access to, and to obtain a
copy of, Protected Health Information in accordance with the provisions of 45
C.F.R. § 164.524. Medical Group shall permit Members to submit proposed
corrections to Protected Health Information, and Medical Group shall accept or
deny such proposed corrections in accordance with the provisions of 45 C.F.R.
§ 164.526. Medical Group shall keep records of all disclosures of
Protected Health Information on an ongoing basis and shall maintain such
information for a period of at least six (6) years, and Medical Group shall
make available the information required to provide an accounting of disclosures
as required by 45 C.F.R. § 164.528.

 

8.7.6                        Right
to Audit. Medical Group shall make its practices, books and records
related to Protected Health Information received from PacifiCare, or created or

 

18

 

received by Medical Group on behalf of PacifiCare or related
to PacifiCare Members, available to PacifiCare and to the Secretary of Health
and Human Services to determine [Medical Group’s/Hospital’s] compliance with
HIPAA and with the provisions of this Section 8.7. In the event it is
determined that Medical Group is in violation of HIPAA or this
Section 8.7, Medical Group shall promptly remedy any such violation and
shall certify the same in writing to PacifiCare.

 

8.7.7                        Future Confidentiality of
Records. From
and after expiration or termination of this Agreement, Medical Group shall
continue to maintain the confidentiality of the Protected Health Information
and shall use or disclose the Protected Health Information only as permitted by
this Agreement or State and Federal law.

 

19

 

PRODUCT
ATTACHMENT A

PACIFICARE
COMMERCIAL HEALTH PLAN

(See Attached)

 

PRODUCT
ATTACHMENT B

PACIFICARE
COMMERCIAL POINT-OF-SERVICE PLAN

(See Attached)

 

PRODUCT
ATTACHMENT C

SECURE
HORIZONS HEALTH PLAN

(See Attached)

 

EXHIBIT
1

MEDICAL
GROUP FACILITIES AND HOSPITAL(S)

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

(See Attached)

 

EXHIBIT
2

DELEGATED
ACTIVITIES

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

(See Attached)

 

EXHIBIT
4

DIVISION
OF FINANCIAL RESPONSIBILITY

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

(See Attached)

 

EXHIBIT
4

ATTACHMENTS
A, B AND C

(These
Attachments are an integral part of this Agreement)

(See Attached)

 

EXHIBIT
5

QUALITY
INCENTIVE PROGRAM

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

(See Attached)

 

EXHIBIT
6

WOMEN’S
HEALTH BONUS PROGRAM

(This
Exhibit 6 is an integral part of this Agreement)

(See Attached)

 

20

 

2.                                       Use of
Defined Terms. Terms utilized in this Amendment shall have the same
meaning set forth in the definitions to the Agreement.

 

3.                                       Agreement
Remains in Full Force and Effect. Except as specifically amended
by this Amendment, the Agreement shall continue in full force and effect.

 

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

 

 

	
   

  	
  PACIFICARE OF CALIFORNIA

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Greg S. Wright

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Greg S. Wright

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  Vice President, Network Management

  
	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
    4/30/03

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  MEDICAL GROUP

  
	
   

  	
  GATEWAY PHYSICIANS MEDICAL GROUP

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Michael Olson

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Michael Olson

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  MIKE OLSON

  NETWORK DEVELOPMENT DIRECTOR

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
  4/16/03

  	
   

  
								

 

21

 

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 1

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

 

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

 

1.3                                 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.

 

1.4                                 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.

 

1.5                                 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.

 

2.2                                 Compliance with OPM Agreement. Medical Group shall comply
with all requirements in the OPM Agreement which arc 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.

 

22

 

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                                 Age/Gender/Benefit Adjusted
Commercial Capitation.
Capitation Payments for Commercial Plan Members shall be made based upon a per
Member per month base capitation rate (“Base Capitation Rate”) adjusted to
reflect the Medical Group Members’ age, gender, and benefit plan participation.
The Base Capitation Rate for both Gateway Physicians-United Western Medical
Center (DEC 16210) and Gateway Physicians-Placentia Linda (DEC 16206) shall be
*** per Commercial Plan Member per month. Age gender adjustment factors are
actuarially determined and arc listed below. Benefit adjustment factors are
actuarially determined by PacifiCare and may take into consideration variations
in benefit plan types, Copayment and coinsurance levels. PacifiCare may change
its benefit adjustment factors as needed to support the differing plan types
that it offers. On an annual basis, PacifiCare may modify the benefit
adjustment factors based on actuarially determined changes. The Standard
Service Capitation Amount will vary during subsequent months as a result of
changes in the age, gender, and benefit plan participation of the Medical
Group’s Members for the applicable month. The total monthly Capitation Payment
shall also be adjusted in the manner set forth in Article 5 of the Base
Agreement.

 

The following are PacifiCare’s age/gender adjustment factors

 

	
  Gender

  	
   

  	
  Age Band

  	
   

  	
  Physician

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  C

  	
   

  	
  00-00

  	
   

  	
  1.8412

  	
   

  
	
  C

  	
   

  	
  01-01

  	
   

  	
  1.1116

  	
   

  
	
  C

  	
   

  	
  02-09

  	
   

  	
  0.4434

  	
   

  
	
  C

  	
   

  	
  10-17

  	
   

  	
  0.4411

  	
   

  
	
  F

  	
   

  	
  18-19

  	
   

  	
  0.6649

  	
   

  
	
  F

  	
   

  	
  20-24

  	
   

  	
  0.9544

  	
   

  
	
  F

  	
   

  	
  25-29

  	
   

  	
  1.3620

  	
   

  
	
  F

  	
   

  	
  30-34

  	
   

  	
  1.3911

  	
   

  
	
  F

  	
   

  	
  35-39

  	
   

  	
  1.3147

  	
   

  
	
  F

  	
   

  	
  40-44

  	
   

  	
  1.3872

  	
   

  
	
  F

  	
   

  	
  45-49

  	
   

  	
  1.5017

  	
   

  
	
  F

  	
   

  	
  50-54

  	
   

  	
  1.7097

  	
   

  
	
  F

  	
   

  	
  55-59

  	
   

  	
  1.9981

  	
   

  
	
  F

  	
   

  	
  60-64

  	
   

  	
  2.2818

  	
   

  

 

23

 

	
  F

  	
   

  	
  65 and Over

  	
   

  	
  1.9375

  	
   

  
	
  M

  	
   

  	
  18-19

  	
   

  	
  0.3840

  	
   

  
	
  M

  	
   

  	
  20-24

  	
   

  	
  0.3787

  	
   

  
	
  M

  	
   

  	
  25-29

  	
   

  	
  0.4805

  	
   

  
	
  M

  	
   

  	
  30-34

  	
   

  	
  0.6052

  	
   

  
	
  M

  	
   

  	
  35-39

  	
   

  	
  0.6675

  	
   

  
	
  M

  	
   

  	
  40-44

  	
   

  	
  0.8186

  	
   

  
	
  M

  	
   

  	
  45-49

  	
   

  	
  1.0095

  	
   

  
	
  M

  	
   

  	
  50-54

  	
   

  	
  1.3110

  	
   

  
	
  M

  	
   

  	
  55-59

  	
   

  	
  1.7451

  	
   

  
	
  M

  	
   

  	
  60-64

  	
   

  	
  2.1970

  	
   

  
	
  M

  	
   

  	
  65 and Over

  	
   

  	
  2.0813

  	
   

  

 

3.1.1                        PacifiCare guarantees that the
Medical Group will receive a Minimum Capitation Guaranty per Commercial Health
Plan Member per month, for the provision of Medical Services. In exchange for this
minimum guaranty, the parties have also agreed to establish a Maximum
Capitation Guaranty. The program shall only apply to calendar year 2003. The
guaranty (the “Minimum/Maximum Capitation Guaranty Program”) is described
further as follows:

 

For the period January 1, 2003. to December 31,
2003 only, the Medical Group Minimum Capitation Guaranty shall be *** per
Member per month (“Minimum Capitation Guaranty”) and the maximum payment shall
be limited to *** per Member per month (“Maximum Capitation Guaranty”). The
capitation guaranty shall be based on a flat per Member per Month amount, not
adjusted for age/sex/benefit plan factors.

 

If the Average Capitation Amount per Member per month for
Medical Group, calculated as set forth below, is less than the Minimum
Capitation Guaranty, PacifiCare shall pay the Medical Group the difference. If
the average Capitation Amount per Member per month exceeds the Maximum
Capitation Guaranty, the Medical Group shall pay PacifiCare the difference.
Such payments shall be made at the times and in the manner described below. The
Minimum/Maximum Capitation Guaranty Program shall be calculated and applied
prior to any other adjustments pursuant to the Agreement.

 

Calculation of the Minimum/Maximum Capitation Guaranty
Program will be based on the “Standard Service Capitation Amounts” shown on the
monthly capitation report for the applicable calendar quarter(s) inclusive of
adjustments for retroactive changes in Membership, but excluding all other
adjustments to Capitation Payments (the “Average Capitation Amount”). The
Standard Service Capitation amount(s) shall be divided by the total Member
months for the period and compared with the Minimum Capitation Guaranty and
Maximum Capitation Guaranty for the applicable period. PacifiCare shall
determine whether any payments are due under the Minimum/Maximum Capitation
Guaranty Program within forty-five (45) calendar days after the end of each
calendar quarter for the first three quarters of calendar year 2003, with a
final calculation as provided below.

 

24

 

If amounts are due to the Medical Group, PacifiCare will
provide payment thirty (30) days after the calculation is due (i.e. 75 days
after the calendar quarter). If amounts are due to PacifiCare, PacifiCare will
deduct such amount from the Capitation Payment of the Medical Group in the
month following provision of the calculation (i.e. if the calculation is
provided on November 15th, the deduction will be taken from the Capitation
Payment due on December 10th). If amounts are due to Medical Group,
PacifiCare will make the payment on the fifteenth (15th) calendar day of the
month following the provision of the calculation.

 

A final, aggregated, year-end settlement will be determined
by PacifiCare on September 15, 2004, based on a calculation for the entire
calendar year 2003. If amounts are due to the Medical Group, PacifiCare will
provide payment by October 15, 2004. If amounts are due to PacifiCare,
PacifiCare will deduct such amount from the October 10, 2004, Medical
Group Capitation Payment. If the Agreement is terminated prior to the final
year-end settlement timeframes as specified in this Section, then the final
settlement will be settled in the manner described at 6.6, Repayment Upon
Termination.

 

Example:

 

Calendar Yr 2003 QuarterAverage
PMPM    Calculation Due    Date

Paid/Recovered

Ql Avg for Ql      May 15, 2003 June 15 (pd)
June 10 (recovered)

Q2 Avg. for Ql-Q2       Aug. 15, 2003 Sept. 15 (pd) Sept. 10
(recovered)

Q3 Avg. for Q1-Q3      Nov. 15, 2003 Dec. 15 (pd) Dec. 10
(recovered)

Q4 Avg. for Q1-Q4      Feb. 15, 2004 March 15 (pd)
March 10 (recovered)

 

2003 Year-end Settlement Avg. for Q1-Q4,
adjusted for retroactivity 

 

Sept. 15, 2004  Oct. 15, 2004 (pd)  Oct.
10, 2004 (recovered)

 

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.

 

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 and no cents ($0.00) per Commercial Plan Member per calendar year.

 

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

 

(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

 

25

 

and percentages will reflect “zero.” In such event, Medical
Group shall be required to obtain ISL coverage from a third-party insurance
earner in accordance with Section 5.6.5 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 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 at the Cost of Care as defined in this Agreement. The
Reinsurance Deductible, Reinsurance Premium and Reinsurance Coinsurance for the
Commercial Plan shall initially be:

 

(i)                                     Reinsurance Deductible shall be
fifty thousand dollars ($50,000) per Commercial Plan Member per calendar year.

 

(ii)                                  Reinsurance Premium shall be six
and ninety-six tenths percent (6.96%) of Commercial Plan Premium.

 

(iii)                               Reinsurance Coinsurance shall be
fifty percent (50%) of the Cost of Care for amounts in excess of the
Reinsurance Deductible but less than two hundred fifty thousand dollars
($250,000) and twenty percent (20%) of the Cost of Care for amounts in excess
of two hundred fifty thousand dollars ($250,000).

 

3.3.2                        CHIP
Budget.  The CHIP Budget
for Commercial Plan Members shall be established based upon a per Member per
month rate (“Base Rate”) adjusted to reflect the Assigned Medical Group
Members’ age, gender, and benefit plan participation. The Base Rate for both
Gateway Physicians-United Western Medical Center (DEC 16210) and Gateway
Physicians-Placentia Linda (DEC 16206) shall be *** per Commercial Plan Member
per month. Age/gender adjustment factors are actuarially determined by
PacifiCare and are listed below. Benefit adjustment factors are actuarially
determined by PacifiCare and take into consideration variations in benefit plan
types, Copayment and coinsurance levels. PacifiCare may change its benefit
adjustment factors as needed to support the differing plan types that it
offers. On an annual basis, PacifiCare may modify the benefit adjustment
factors based on actuarially determined changes. The CHIP Budget will vary
during subsequent months as a result of changes in the age, gender, and benefit
plan participation of the Assigned Medical Group Members for the applicable
month.

 

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

 

26

 

	
  Gender

  	
   

  	
  Age Band

  	
   

  	
  Hospital

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  C

  	
   

  	
  00-00

  	
   

  	
  4.0488

  	
   

  
	
  C

  	
   

  	
  01-01

  	
   

  	
  0.7234

  	
   

  
	
  C

  	
   

  	
  02-09

  	
   

  	
  0.3228

  	
   

  
	
  C

  	
   

  	
  10-17

  	
   

  	
  0.3706

  	
   

  
	
  F

  	
   

  	
  18-19

  	
   

  	
  0.5841

  	
   

  
	
  F

  	
   

  	
  20-24

  	
   

  	
  0.9398

  	
   

  
	
  F

  	
   

  	
  25-29

  	
   

  	
  1.4088

  	
   

  
	
  F

  	
   

  	
  30-34

  	
   

  	
  1.3551

  	
   

  
	
  F

  	
   

  	
  35-39

  	
   

  	
  1.1025

  	
   

  
	
  F

  	
   

  	
  40-44

  	
   

  	
  1.0464

  	
   

  
	
  F

  	
   

  	
  45-49

  	
   

  	
  1.1741

  	
   

  
	
  F

  	
   

  	
  50-54

  	
   

  	
  1.4581

  	
   

  
	
  F

  	
   

  	
  55-59

  	
   

  	
  2.0324

  	
   

  
	
  F

  	
   

  	
  60-64

  	
   

  	
  2.4463

  	
   

  
	
  F

  	
   

  	
  65 and Over

  	
   

  	
  2.2225

  	
   

  
	
  M

  	
   

  	
  18-19

  	
   

  	
  0.4431

  	
   

  
	
  M

  	
   

  	
  20-24

  	
   

  	
  0.4520

  	
   

  
	
  M

  	
   

  	
  25-29

  	
   

  	
  0.5000

  	
   

  
	
  M

  	
   

  	
  30-34

  	
   

  	
  0.5081

  	
   

  
	
  M

  	
   

  	
  35-39

  	
   

  	
  0.6558

  	
   

  
	
  M

  	
   

  	
  40-44

  	
   

  	
  0.8823

  	
   

  
	
  M

  	
   

  	
  45-49

  	
   

  	
  1.1058

  	
   

  
	
  M

  	
   

  	
  50-54

  	
   

  	
  1.5844

  	
   

  
	
  M

  	
   

  	
  55-59

  	
   

  	
  2.2785

  	
   

  
	
  M

  	
   

  	
  60-64

  	
   

  	
  3.0045

  	
   

  
	
  M

  	
   

  	
  65 and Over

  	
   

  	
  2.9368

  	
   

  

 

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

 

27

 

(v)                                 Any and all amounts received
from third parties for Hospital 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, not to exceed *** per Commercial Plan
Member per month.

*** 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.

 

***

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

 

3.4.4                        PIP Threshold shall be calculated using
several factors, included trended 2002 calendar year and ongoing actual
performance for Medical Group, inflationary trends and benefit adjustments. Effective
January 1, 2003, the PIP Threshold shall be *** per Commercial Plan Member
per month. The PIP Threshold shall be re-calculated yearly and PacifiCare shall
notify Medical Group of the new PIP Threshold by sixty (60) calendar days prior
to the anniversary date.

 

3.4.5                        PIP Surplus. Medical Group shall
participate in the Pharmacy Upside Sharing Program. In the event the PIP
Expense is less than the PIP Threshold during the 2003 calendar

 

28

 

year, the amount of this difference will be referred to as
the PIP Surplus. In this event, fifty percent (50%) of the surplus shall be
allocated to Medical Group. This PIP shall be settled on a quarterly basis
beginning with the second quarter of the 2003 calendar year and ongoing within
ninety (90) days of the end of the quarter. Quarterly payouts will be subject
to an IBNR adjustment. There will be a final, cumulative settlement produced
within one hundred eight (180) days of the 2003 calendar year.

 

3.4.6                        PIP Deficit. In the event that the PIP
Expense is greater than the PIP Budget, zero percent (0%) of the deficit shall
be allocated to Medical Group.

 

3.4.7                        Pharmacy Management Programs. Medical Group shall continue
its Pharmacy Management Programs. PacifiCare’s Clinical Pharmacist will
continue to work with Medical Group to identify performance improvement
opportunities. Medical Group shall work cooperatively with PacifiCare’s
Clinical Pharmacist and participate in PacifiCare’s Pharmacy Management
Initiatives, as applicable.

 

3.4.8                        Annual Review. The PIP shall be adjusted
annually to reflect changes, including Pharmacy expenses, inflation, benefit
plans and drug management programs.

 

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

 

	
   

  	
  PACIFICARE OF CALIFORNIA

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Greg S. Wright

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Greg S. Wright

  
	
   

  	
  Title:

  	
  Vice President, Network Management

  
	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
  4/30/03

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  MEDICAL GROUP

  GATEWAY PHYSICIANS MEDICAL

  ASSOCIATES

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Mike Olson

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  MIKE OLSON

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  NETWORK
  DEVELOPMENT DIRECTOR

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
  4/16/03

  	
   

  
											

 

29

 

PRODUCT ATTACHMENT B

 

PACIFICARE
COMMERCIAL POINT-OF-SERVICE PLAN

 

In addition to the terms
and conditions set forth in the Base Agreement and Product Attachment A, the
following terms and conditions, as defined below, are also applicable to the
PacifiCare Commercial Point-of-Service Plan

 

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

 

1.2                                 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.

 

1.3                                 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.

 

1.4                                 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.

 

1.5                                 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.

 

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

 

30

 

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 monthly Standard Service Capitation Amount
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. The payment described in this Section is payment in full for
In-Network Services, except for Copayments, coordination of benefits and third
party recoveries.

 

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.

 

3.2                                 Commercial POS Control Program.  Effective January 1, 2003, the Commercial POS Control
Program is discontinued. Therefore, this Section 3.2 [Commercial POS
Control Program] is hereby deleted and the numbering reserved for future use.

 

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.

 

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

 

	
   

  	
  PACIFICARE OF CALIFORNIA

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Greg S. Wright

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  	
  Greg S. Wright

  
	
   

  	
  Title:

  	
  Vice President, Network Management

  
	
   

  	
   

  
	
   

  	
  Date:

  	
  4/30/03

  	
   

  
							

 

31

 

	
   

  	
  MEDICAL GROUP

  GATEWAY PHYSICIANS MEDICAL

  ASSOCIATES 

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Mike
  Olson

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  MIKE OLSON

  	
   

  
	
   

  	
   

  	
  NETWORK DEVELOPMENT DIRECTOR

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Date:

  	
  4/16/03

  	
   

  
									

 

32

 

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                                 CMS Agreement is the Medicare - Choice
contract between PacifiCare and CMS.

 

1.2                                 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.

 

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

 

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

 

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

 

1.6                                 Secure Horizons Revenue is the Monthly CMS Payment for
Medical Group Members enrolled in the Secure Horizons Health Plan, less
payments for broker and agent commissions/compensation (when applicable),
amounts paid for certain third parties for services provided in connection with
the identification and enrollment of individuals who can be designated as
Specified Low-Income Beneficiaries eligible for the Qualified Medicare Beneficiary
Program, and premium taxes.

 

ARTICLE 2

DUTIES
OF MEDICAL GROUP

 

2.1                                 Compliance with CMS Agreement
and Federal Medicare Law.
Medical Group shall comply with all requirements in the CMS 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 CMS 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
CMS 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 CMS for the Medicare program.

 

33

 

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
CMS.

 

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 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 CMS 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
CMS requires compliance with the provisions of this Section as a condition
for participation in the Secure Horizons Health Plan.

 

34

 

 

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.

 

2.8                                 Termination of CMS Agreement. In the event the CMS 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 CMS and PacifiCare.

 

ARTICLE 3

COMPENSATION

 

3.1                                 Capitation Payments for Secure
Horizons Members.  Capitation Payments for Secure Horizons
Members assigned to Gateway Physicians-United Western Medical Center (DEC
16210) 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 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 and no cents ($0.00) 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 5.6.5 of the Base
Agreement.

 

3.3                                 Secure Horizons Hospital
Incentive Program.  PacifiCare shall establish and administer an
annual

 

35

 

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 valued at the Cost
of Care as defined in this Agreement. The Reinsurance Deductible, Reinsurance
Premium and Reinsurance Coinsurance for the Secure Horizons Plan shall initially
be:

 

(i)                                     Reinsurance Deductible shall be
forty thousand dollars and no cents ($40,000) per Secure Horizons Member per
calendar year.

 

(ii)                                  Reinsurance Premium shall be
nine and six tenths percent (9.06%) of the Secure Horizons Revenue.

 

(iii)                               Reinsurance Coinsurance shall be
fifty percent (50%) of the Cost of Care for amounts in excess of the
Reinsurance Deductible but less than two hundred fifty thousand dollars
($250,000) and twenty percent (20%) of the Cost of Care for amounts in excess
of two hundred fifty thousand dollars ($250,000).

 

3.3.2                        SHIP Budget.  The SHIP Budget for Secure Horizons Members assigned to Gateway
Physicians-United Western Medical Center (DEC 16210) shall be *** of the Secure
Horizons Revenue per Secure Horizons Member per Month, plus twenty five percent
(25%) 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 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:

 

36

 

Seventy percent
(70%) to Medical Group

Thirty percent
(30%) to PacifiCare

 

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, not to exceed,*** per Secure Horizons
Plan Member per month.

*** 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.

 

3.3.7                        One Time Adjustment for 2003
Increases in Secure Horizons Revenue.  The Capitation
Percentage set forth above assumes a prospective Secure Horizons Revenue
increase effective as of January 1, 2003, of no greater than *** over the
average Secure Horizons Revenue for Assigned Medical Group Members for calendar
year 2002 (the “Annual Increase”). In the event that the actual Annual Increase
is more than ***, as determined by law or legislative or regulatory action or
federal administrative agency interpretation no later than December 31,
2002 (as calculated by PacifiCare for Assigned Medical Group Members) the
increase shall be used to enhance market competitiveness and/or improve Secure
Horizons Plan benefits. PacifiCare shall reduce the Capitation Percentage to an
amount that will adjust Medical Group’s Standard Service Capitation Payments to
reflect the *** agreed limit on the Annual Increase in Secure Horizons Revenue
under this Agreement. The resulting adjustment, if any, in the Capitation
Percentage shall begin with the January 2003 Standard Service Capitation
Payment.

 

3.4 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.

 

37

 

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

 

	
   

  	
  PACIFICARE OF CALIFORNIA

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Greg
  S. Wright

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  	
  Greg S. Wright

  
	
   

  	
  Title:

  	
  Vice President, Network Management

  
	
   

  	
   

  
	
   

  	
  Date:

  	
  4/30/03

  	
   

  
					

 

	
   

  	
  MEDICAL GROUP

  
	
   

  	
  GATEWAY PHYSICIANS
  MEDICAL

  
	
   

  	
  ASSOCIATES

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Mike
  Olson

  	
   

  
	
   

  	
  Name:

  	
  MIKE
  OLSON

  	
   

  
	
   

  	
   

  	
  NETWORK DEVELOPMENT DIRECTOR

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Date:

  	
  4/16/03

  	
   

  
									

 

38

 

PACIFICARE OF CALIFORNIA

 

MEDICAL GROUP IPA SERVICES
AGREEMENT

(PROFESSIONAL CAPITATION)

 

EXHIBIT 1

MEDICAL GROUP FACILITIES AND
HOSPITAL(S)

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

 

Medical
Group Facilities:

 

	
  Gateway Physicians Medical Associates-United Western
  Medical Center 

  
	
   

  	
  Commercial and Secure Horizons Health Plan

  

 

	
  Gateway Physicians Medical Associates-Placentia Linda 

  
	
   

  	
  Commercial Health Plan Only

  

 

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):

Western
Medical Center

Placentia
Linda Hospital

 

Medical
Group Service Area:

 

The
Medical Group Service Area is the geographic area served by the Medical Group’s
Participating Providers, including referral providers. The Medical Group
Service Area is defined as being within a thirty (30) mile radius of each of
the Medical Group Facilities, and includes the facilities and physician offices
beyond the thirty mile radius where Referral Services are arranged for by
Medical Group. The Medical Group Service Area shall be determined by
PacifiCare, based upon the shortest route using public streets and highways.

 

39

 

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) medical 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) medical
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) medical 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 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.

 

40

 

MEDICAL MANAGEMENT
DELEGATION GRID

 

	
  Function

  	
   

  	
  Delegation

  Status

  	
   

  	
  Provider
  Group Responsibility/

  Performance Measure

  	
   

  	
  Reporting

  Frequency

  	
   

  	
  PacifiCare
  Oversight

  
	
  UM Program Structure and
  Process

  	
   

  	
  ý Delegated
o Not delegated

  	
   

  	
  Development and
  documentation of program structure and accountability, including.

  1)      Goals & Objectives, including behavioral health care aspects

  2)      Committee responsibilities.

   

  a)      Membership

  b)      Minutes

  c)      Dissemination of information

  d)      Education of staff & providers

   

  3        UM Director & senior physician’s and designated behavioral health
  care practitioner roles

  4        UM Dept interfaces with other depts.

  5        Program is evaluated & approved annually

   

  For each UM function
  delegated there must be documentation of.

   

  1        Staff & Physician responsibilities related to each UM function

  2        Adequate staffing mix

  3        After-hours UM process defined

  4        Interface with PacifiCare appropriately

  5        Data elements as required

  6        Reporting capability

   

  Implementation of
  corrective action plan for elements of non-compliance.

  	
   

  	
  •      Annual submission of UM Program and Work Plan and Evaluation

  •      Submission of corrective action plans as needed

  	
   

  	
  •      Initial onsite assessment using approved oversight document

  •      Annual oversight assessment

  •      Annual PacifiCare committee approval of UM Program documents

  •      Identification of corrective action plans for elements of
  non-compliance

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Prior Authorization
  Professional

  

  Institutional

  	
   

  	
  ý Delegated
o Not delegated

  

  
o Delegated
ý Not delegated

  	
   

  	
  For prior authorization the
  Provider Group (PG) must:

   

  •      Comply with PacifiCare’s Turn Around Times and notification
  requirements.

  •      Follow nationally recognized medical necessity criteria

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

  	
   

  	
  •      Weekly submission of authorization denial logs

  •      Monthly submission of encounter data

  •      Participation in census verification process

   

  	
   

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

  •      Annual onsite assessment to determine ability to perform function

   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Concurrent Review

  	
   

  	
  o Delegated
ý Not delegated

  	
   

  	
  For concurrent review PG
  must:

  •      Comply with PacifiCare’s Turn Around Times and notification
  requirements.

  •      Follow nationally recognized 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 patient census by admission and discharge and
  Level of Care

  •      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

   

  

 

41

 

	
  Function

  	
   

  	
  Delegation

  Status

  	
   

  	
  Provider
  Group Responsibility/

  Performance Measure

  	
   

  	
  Reporting

  Frequency

  	
   

  	
  PacifiCare
  Oversight

  
	
  Discharge Planning

  	
   

  	
  o Delegated
ý Not delegated

  	
   

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

  Issue Skilled Nursing
  Facility Notice of Non-coverage timely and appropriately

  	
   

  	
  Reviewed during annual
  assessment

  	
   

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

  •      Annual onsite assessment to determine ability to perform function

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Out Of Area (OOA)

  	
   

  	
  o Delegated
ý Not delegated

  	
   

  	
  If not delegated, report
  any OOA notifications received by group

  If delegated, develop and
  document program to perform OOA concurrent review meeting all regulatory and
  PacifiCare standards

  	
   

  	
  If Group delegated, OOA
  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

  	
   

  	
  o Delegated
ý Not delegated

  	
   

  	
  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

  •      ESRD

  •      Transplants

  •      Catastrophic

  	
   

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

  •      Annual onsite assessment to determine ability to perform function

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Transplants

  	
   

  	
  ý Not delegated

  	
   

  	
  Develop and document
  Policies and Procedures to support notification to PacifiCare of potential
  transplant candidates.

  •      Responsible to provide PacifiCare with all necessary information to
  make medical determination and manage the case.

  	
   

  	
  Report cases immediately

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  New Technology

  	
   

  	
  ý Not delegated

  	
   

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

  	
   

  	
  Ad Hoc

  	
   

  	
  NA

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Retrospective-Review

  

  Professional

  

  Retrospective Review Institutional

  	
   

  	
  ýDelegated
o Not delegated

  
o Delegated
ý Not delegated

  	
   

  	
  For Retroactive-review of
  services PG must:

   

  •      Comply with PacifiCare’s Turn Around Times and notification
  requirements.

  •      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

  

  Professional

  

  Institutional

  	
   

  	
  

  

  ýDelegated
o Not delegated

  
o Delegated
ý Not delegated

  	
   

  	
  For Denials of 1 services
  PG must:

  •      Comply with PacifiCare’s Turn Around Times and notification
  requirements.

  •      Follow nationally recognized 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.

  

 

42

 

	
  Function

  	
   

  	
  Delegation

  Status

  	
   

  	
  Provider
  Group Responsibility/

  Performance Measure

  	
   

  	
  Reporting

  Frequency

  	
   

  	
  PacifiCare
  Oversight

  
	
  Benefit  Interpretations

  	
   

  	
  ý Not delegated

  	
   

  	
  For Benefit Interpretations
  PG must:

  •      Comply with PacifiCare’s Turn Around Times and notification requirements

  •      Request PacifiCare interpretation when unable to make clear determination
  based on resources provided by
  PacifiCare (e.g., Benefits Manual)

  •      Request PacifiCare determination regarding medical necessity when requested service appears to be of an experimental or investigational nature for a member who has a “life-threatening” or “seriously debilitating” condition as defined inthe California Health & Safety
  Code (see note below)*.

  	
   

  	
  N
  A

  	
   

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

  •      Annual onsite assessment to determine ability to perform function

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Appeals

  	
   

  	
  oDelegated
ý Not delegated

  	
   

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

   

  •      Notify PacifiCare of all member and provider appeals coming through PG

  	
   

  	
  PacifiCare will  provide the PG a quarterly report to show number of appeals and overturn rate for specific
  PG.

  	
   

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

  •      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 Provider Group, are outlined above.

 

The Provider 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.

 

California Health and Safety
Code Section 1370.4(a)(l)(B)(i) and (ii) and Section l370.4(a)(l)(C) defines
the following terms: “Life-threatening” means either or both of the following:
(i) Diseases or conditions where the likelihood of death is high unless the
course of the disease is interrupted. (ii) Diseases or conditions with
potentially fatal outcomes, where the end point of clinical intervention is
survival. “Seriously debilitating,” means diseases or conditions that cause
major irreversible morbidity.

 

43

 

CREDENTIALING DELEGATION
GRID

 

	
  Function

  	
   

  	
  Delegation

  Status

  	
   

  	
  Provider
  Group Responsibility/

  Performance Measure

  	
   

  	
  Reporting

  Frequency

  	
   

  	
  PacifiCare
  Oversight

  
	
  Credentialing Program
  description and or Policies and Procedures P&Ps

  	
   

  	
  ý Delegated

  
o Not delegated

  	
   

  	
  Full
  Compliance with NCQA Standards:

   

  •      Define the scope of practitioner network to be cred recred., i e. MD, DO, DPM, DDS, DC, and behavioral health and other licensed independent practitioners

  •      Define criteria and verification of criteria

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

  •      Describe the process to delegate credentialing recredentialing

  •      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 proceduressubmitted at least annually.

  	
   

  	
  •      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

  	
   

  	
  ý Delegated

  
o Not delegated

  	
   

  	
  Full Compliance with NCQA
  Standards:

   

  •      The Provider Group (PG) designates a credentialing committee, including a range of participating practitioners of different specialties, that makes recommendations regarding credentialing
  decisions using a peer review
  process.

  •      The PG documents committee advice in all credentialing/ recredentialing decisions

  •      The PG documents meaningful process for consideration of performance at recredentialing.

  	
   

  	
  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

  	
   

  	
  ý Delegated

  
o Not delegated

  	
   

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

   

  Meet 90%
  of all NCQA credentialing standards on file review.

   

  Meet 100%
  of NCQA & regulatory body standards related to primary source  verification of the
  following:

  	
   

  	
  Submit current list  of practitioners credentialed and date approved with quarterly report.

  	
   

  	
  •      Initial onsite assessment

  •      Annual oversight assessment

  •      Annual PacifiCare Committee
  approval

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

  •      Annual audit conducted
  of

  

 

44

 

	
  Function

  	
   

  	
  Delegation

  Status

  	
   

  	
  Provider
  Group Responsibility/

  Performance Measure

  	
   

  	
  Reporting

  Frequency

  	
   

  	
  PacifiCare
  Oversight

  
	
   

  	
   

  	
   

  	
   

  	
  •      License

  •      Hospital Admitting privileges, if applicable

  •      Education &  Training

  •      Board certification

  •      Professional liability claims

   

  Meet 100%
  of NCQA & regulatory body  standards related to data collection of  the following:

   

  •      DEA CDS

  •      Work History

  •      Malpractice Insurance

  	
   

  	
   

  	
   

  	
  provider’s
  practitioners credentialing files according to NCQA methodology

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Application  Attestation

  	
   

  	
  ý Delegated

  
o Not delegated

  	
   

  	
  Full compliance with NCQA
  Standards.

   

  The PG
  application must include a  statement regarding:

   

  •      Reasons for any inability to perform.

  •      Lack of present illegal drug use.

  •      History of loss of license or felony conviction

  •      History of loss or limitation of privileges or disciplinary activity

  •      Current malpractice insurance coverage, including dates & coverage amount

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

  •      Signed within 180 days of Committee approval date.

  	
   

  	
  Immediate  submission of any changes to application.

  	
   

  	
  •      Initial onsite assessment.

  •      Annual oversight assessment

  •      Annual PacifiCare Committee
  approval

  •      Annual audit conducted
  of provider’s practitioners’ credentialing files according to NCQA methodology

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

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  National Practitioner Data
  Base (NPDB) Information/Initial Sanction Information

  	
   

  	
  ý Delegated

  
o Not delegated

  	
   

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

   

  •      Information from NPDB

  •      Sanction or Limitations information on licensure, as appropriate, must cover the most recent 5 year period available through the data source:

  •      MD, DOs: NPDB, State Board
  of Medical Examiners, or  Federation of State Medical  Boards

   

  •      DCs: State Board of Chiropractic
  Examiners or the Federation of
  Chiropractic Licensing Boards

  •      DDSs: NPDB or State Board of Dental Examiners

  •      DPMs: State Board of Podiatric Examiners or Federation of

  	
   

  	
  None

  	
   

  	
  •      Initial onsite assessment

  •      Annual oversight assessment

  •      Annual PacifiCare committee approval.

  •      Annual audit conducted of provider’s
  practitioners credentialing files according to NCQA methodology.

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

  

 

45

 

	
  Function

  	
   

  	
  Delegation

  Status

  	
   

  	
  Provider Group
  Responsibility/

  Performance Measure

  	
   

  	
  Reporting

  Frequency

  	
   

  	
  PacifiCare

  Oversight

  
	
   

  	
   

  	
   

  	
   

  	
  Podiatric
  Medical Boards

   

  •      Non-physician behavioral health & other Independently licensed practitioners Appropriate state agency or State Board of Licensure or Certification

   

  •      For all practitioners (except DDS) review of Medicare Medicaid
  sanctions, must cover the most recent 1 year period available through the
  data source NPDB or Medicare/ Medicaid sanction report.

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Initial office site visit
  and  medical record
  keeping practice review of all PCPs, OB-GYNs, and High Volume Behavioral Healthcare practitioners

  	
   

  	
  ý Delegated

  
o Not delegated

  	
   

  	
  Full
  compliance with NCQA Standards  regarding Initial site visit/medical record keeping
  review prior to the Committee  approval date.

   

  Structured
  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

   

  Specify
  methodology for identification of  potential high volume
  behavioral health  practitioners.

   

  Established
  thresholds for acceptable  performance against identified  standards.

   

  Institutes
  actions for improvement with  sites not meeting thresholds.

   

  Evaluation
  of effectiveness of actions at  least every 6 months until sites with  deficiencies meet
  thresholds.

   

  Follows
  same procedure for an initial site  visit when a PCP, OB/GYN,
  or high  volume
  behavioral health practitioner  relocates or opens a new site.

   

  Procedures for detecting
  deficiencies  subsequent
  to the initial site visit, at least quarterly.  Reevaluates site of
  new deficiencies and institutes
  actions for improvement.

   

  Incorporation
  of this information into  the credentialing process.

  	
   

  	
  On an annual basis,
  include list of all site reviews subsequent to the initial site visit

  	
   

  	
  •      Initial onsite assessment

  •      Annual oversight assessment

  •      Annual review of audit
  tool

  •      Annual audit conducted
  of provider’s practitioners credentialing files according
  to NCQA methodology

  •      Annual PacifiCare Committee approval

  •      Implementation of Corrective
  Action of non-compliance

  

 

46

 

	
  Function

  	
   

  	
  Delegation

  Status

  	
   

  	
  Provider
  Group Responsibility/

  Performance
  Measure

  	
   

  	
  Reporting

  Frequency

  	
   

  	
  PacifiCare

  Oversight

  	
   

  
	
  Recredentialing Primary source verification (PSV)

  	
   

  	
  ý
  Delegated

  o Not delegated

  	
   

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

   

  Recredentialing
  conducted every three  years by the PG.

   

  Recredentialing
  must be completed within 36 months of prior credentialing or recredentialing
  activity (as required by CMS & DMHC).

   

  Meet 90%
  of all NCQA Recredentialing standards on file review.

   

  Meet 100%
  of NCQA and regulatory body standards related to primary source verification
  of the following:

   

  •      License

   

  •      Hospital Admitting privileges, if applicable

   

  •      Board certification (if expired or new since initial credentialing)

   

  •      Professional liability claims

   

  •      Signed Attestation regarding

   

  •      Reasons for any inability to perform.

   

  •      lack of present illegal drug use.

   

  •      History of loss or limitation of privileges or disciplinary activity, and

   

  •      Current malpractice insurance coverage, including dates &
  amount, and

   

  •      correctness and completeness of application

   

  Meet 100%
  of NCQA and regulatory body standards related to data collection of the
  following:

   

  •      DEA/CDS

   

  •      Malpractice Insurance

  	
   

  	
  Include list of all
  practitioners re- credentialed, including approval dates, on a quarterly
  basis (with quarterly report)

  	
   

  	
  •      Initial onsite assessment

   

  •      Annual overs got
  assessment

   

  •      Annual audit conducted of
  provider’s practitioners recredentialing files according to NCQA methodology

   

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

   

  •      Annual PacifiCare
  Committee approval

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Recredentialing National Practitioner Data Base
  (NPDB) information/ Recredentialing Sanction information

  	
   

  	
  ý Delegated

   

  o Not delegated

  	
   

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

   

  Recredentialing
  conducted every three  years by the PC.

   

  Recredentialing
  must be completed within 36 months of prior credentialing or recredentialing
  activity (as required

  	
   

  	
  None

  	
   

  	
  •      Initial onsite assessment

   

  •      Annual oversight
  assessment

   

  •      Annual audit conducted of
  provider’s practitioners’ recredentialing files according to NCQA

  	
   

  

 

47

 

	
  Function

  	
   

  	
  Delegation

  Status

  	
   

  	
  Provider
  Group Responsibility/

  Performance Measure

  	
   

  	
  Reporting

  Frequency

  	
   

  	
  PacifiCare

  Oversight

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  by
  CMS & DMHC).

   

  Recredentialing information found
  in credentialing files includes the following:

   

  •      Information from NPDB

  •      Sanction or Limitations information on licensure, as appropriate, must cover the last 2  year
  period available through the data source (data that may not have come to the attention of
  the provider previously):

   

  •      MD, DOs: NPDB, State Board
  of Medical
  Examiners, or  Federation of State Medical  Boards 

   

  •      DCs. State Board of Chiropractic
  Examiners or the Federation of
  Chiropractic Licensing Boards
  

   

  •      DDSs NPDB or State Board of Dental Examiners  

   

  •      DPMs State Board of Podiatric Examiners or Federation of Podiatric Medical Boards  

   

  •      Non-physician behavioral health & other independently licensed practitioners. Appropriate state agency or State Board of Licensure or Certification  

   

  •      For all practitioners (except DDS): review of Medicare/ Medicaid sanctions, must cover the last 2 year period available through the data source (data that may not have come to the attention of the provider previously):

   

  •      NPDB or Medicare/ Medicaid sanction report

  	
   

  	
   

  	
   

  	
  methodology
  

   

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

   

  •      Annual PacifiCare Committee approval

  	
   

  
	
   

  
	
   

  
	
   

  
	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Incorporation
  of the following data in the Recredentialing decision-making process for PCPs
  and high volume behavioral health practitioners: 

   

  •      Member complaints

   

  •      QI activities

  	
   

  	
  ý Delegated

  oNot delegated

  	
   

  	
  Full compliance with NCQA
  Recredentialing Standards.

   

  Recredentialing conducted
  every three  years by the
  PC. (CMS, DMHC)  

   

  Recredentialing
  must be completed within 36 months of prior credentialing  or recredentialing
  activity, (as required  by CMS & DMHC).

   

  Incorporate
  the following information  into the recredentialing decision making  process for PCPs and high
  volume  behavioral
  health practitioners:

   

  •      Member :complaints (as received from plan

  	
   

  	
  List of all  recredentialing decisions completed on an annual basis

  	
   

  	
  •      Initial onsite assessment

   

  •      Annual oversight assessment 

   

  •      Annual audit conducted of provider’s practitioners’ recredentialing
  files according to NCQA methodology 

   

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

  	
   

  

 

48

 

	
  Function

  	
   

  	
  Delegation

  Status

  	
   

  	
  Provider
  Group Responsibility/

  Performance Measure

  	
   

  	
  Reporting

  Frequency

  	
   

  	
  PacifiCare

  Oversight

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  •      Information from quality
  improvement activities 

   

  Specify criteria/methodology for identification of
  potential high volume behavioral health practitioners.

  	
   

  	
   

  	
   

  	
  •      Annual PacifiCare
  Committee approval

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Ongoing monitoring of Sanctions and Complaints

  	
   

  	
  ý
  Delegated

   

  o
  Not delegated

  	
   

  	
  Full compliance with NCQA standards.

   

  P&Ps for ongoing monitoring of sanctions and
  complaints include addressing the following sources:

  •      Medicare and Medicaid
  Sanctions 

  •      State Sanctions or
  limitations on licensure 

  •      Complaints (as received
  from plan)

   

  Evidence the PG collects and reviews information
  from the above referenced sources

   

  PG takes action on instances of poor quality

  	
   

  	
  New P&Ps submitted at least annually

   

  Notification to PCC of any actions reported on a
  practitioner immediately

  	
   

  	
  •      Initial onsite assessment

   

  •      Annual oversight
  assessment

   

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

   

  •      Annual PacifiCare
  Committee approval

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Process for Peer

   Review Disciplinary Action

  	
   

  	
  ý
  Delegated

   

  o
  Not delegated

  	
   

  	
  Full compliance with NCQA Standards.

   

  P&Ps for altering the conditions of the
  practitioner’s participation with PacifiCare based on quality of care of
  service:

   

  P&Ps for reporting of quality
  deficiencies to appropriate authorities.

   

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

   

  P&Ps to describe appeals
  process & process of notifying practitioners of appeal rights.

  	
   

  	
  New P&Ps submitted at least annually

   

  Notification to PCC of any actions reported on a
  practitioner immediately

  	
   

  	
  •       Initial onsite assessment

   

  •      Annual oversight
  assessment

   

  •      Annual PacifiCare
  committee approval 

   

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

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Assessment of Organizational Providers (hospitals,
  home health agencies, SNFs’ free- standing surgical centers, behavioral
  health facilities providing mental health or substance abuse services in an
  inpatient, residential or ambulatory setting. If PMG maintain a contract for
  Medicare 

  + Choice
  members then additional facilities are required; laboratories, outpatient
  rehabilitation, dialysis centers, and physical therapy/speech therapy
  facilities)

  	
   

  	
  ý
  Delegated

   

  o
  Not delegated

  	
   

  	
  For contracted acute care
  hospitals, home health agencies, SNFs, free- standing surgical centers,
  behavioral health facilities, laboratories, outpatient rehabilitation,
  dialysis centers, physical therapy/speech therapy provider facilities where
  the contract is held by the PG. (NCQA, CMS)

   

  1      Confirms good standing
  with State and Federal regulatory bodies (including if providing services to
  Medicare enrollees. PG must confirm provider’s participation in Medicare);
  and 

  2.     Confirms accreditation; or

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

  4.     Initially & at least
  every three years, confirms continued good standing of

  	
   

  	
  Submit list of contracted organizational providers
  on an annual basis

  	
   

  	
  •      initial onsite assessment 

   

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

   

  •      Annual PacifiCare
  committee approval 

   

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

  	
   

  

 

49

 

	
  Function

  	
   

  	
  Delegation

  Status

  	
   

  	
  Provider
  Group Responsibility/

  Performance Measure

  	
   

  	
  Reporting

  Frequency

  	
   

  	
  PacifiCare

  Oversight

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  regulatory bodies, and
  if applicable, accreditation

  •      At least 90% of all
  medical organizational providers meet all requirements

  •      At least 50% of all
  behavioral health care delivery organizational providers meet all
  requirements

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Sub-Delegation of Credentialing

  	
   

  	
  ý
  Delegated

   

  o
  Not delegated

  	
   

  	
  If PG sub-delegates Credentialing to a CNO Hospital,
  IPA, Behavioral Health, etc

   

  •      Detailed documentation of
  mutually agreed upon delegation agreement identifying:

  •      Listing of responsibilities
  of delegate (PG) & sub-delegate;

  •      Specific delegated
  activities;

  •      Process for evaluating
  sub-delegate’s performance, and

  •      Remedies if sub-delegate
  does not perform

  •      PG retains right to
  approve/disapprove new providers and to discipline providers

  •      Pre-delegation evaluation

  •      Annual evaluation,
  including file review, according to NCQA’s methodology

  •      If deficiencies found,
  evidence of PG & sub-delegate follow up for opportunities for improvement

  	
   

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

  	
   

  	
  •      Initial onsite assessment

  •      Annual assessment of sub-delegation process, including agreements,
  policies and procedures and ongoing evaluation of performance, according to
  NCQA standards & methodology 

  •      Annual PacifiCare committee approval

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

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Accessibility to Credentialing Files

  	
   

  	
  ý
  Delegated

   

  o
  Not delegated

  	
   

  	
  Should any of the following provider events occur,
  PCC shall have access to Medical Group’s credentialing files to ensure
  practitioners are properly credentialed for continuity and coordination of
  care for members: 

  •      Bankruptcy

  •      Termination of contract 

  •      De-delegation of
  credentialing activities 

   

  Credentialing files be available, including making
  appropriate copies, for regulatory & accreditation
  audits.

  	
   

  	
  Immediately notify PCC of any such provider event.

   

  As needed, provide PCC access to PG
  credentialing/recredentialing files should any of the referenced provider
  events occur.

   

  Comply with requests for selected credentialing
  files for regulatory &/or accreditation audits.

  	
   

  	
  •      Access PG
  credentialing/recredentialing files should any of the referenced provider
  events occur 

  •      Collection of copies of
  selected credentialing/recred entialing files from PG for regulatory and
  accreditation audits, as applicable

  	
   

  

 

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

 

PacifiCare will perform audits prior to
delegation, annually, and as needed to evaluate the group’s

 

50

 

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.

 

MEDICAL RECORDS DELEGATION GRID

 

	
  Function

  	
   

  	
  Delegation

  Status

  	
   

  	
  Provider
  Group Responsibility/

  Performance Measure

  	
   

  	
  Reporting

  Frequency

  	
   

  	
  PacifiCare

  Overnight

  	
   

  
	
  Systematic Review of Medical Records

  	
   

  	
  ý
  Delegated

  o
  Not delegated

  	
   

  	
  •      Set documentation
  standards and distribute to practice sites. Documentation audit tool to
  include all elements required by NCQA and PacifiCare.

   

  •      At least annually, audit
  medical records from a sample of primary care practitioners with 50 or more
  members.

   

  •      Conduct focused follow-up
  to improve documentation by PCPs who perform poorly against standards.

  	
   

  	
  Annual submission of medical records review work
  plan and audit tool 

   

  At least annually report at a minimum: the number of
  physicians whose medical records were reviewed; any practitioner-specific
  actions taken for improvement, and the results of those actions.

  	
   

  	
  Quality Improvement Committee or their designee
  reviews and approves Annual Work Plan and monitoring report

   

  •      Audit Provider Group’s
  policies and processes on an annual basis to ensure conformance to standards
  and note deficiencies identified Facilitate and monitor Provider Group’s
  compliance with work plan and corrective action plans.

  	
   

  

 

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

 

The Provider 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
delegated status.

 

51

 

CLAIMS DELEGATION GRID 

 

	
  Function

  	
   

  	
  Delegation

  Status

  	
   

  	
  Medical
  Group Responsibility/ Performance Measure

  	
   

  	
  Reporting
  Frequency

  	
   

  	
  PacifiCare
  Oversight

  	
   

  
	
  CMS Regulators

  	
   

  	
  ý Delegated

   

  o
  Not delegated

  	
   

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

  Claims payment turnaround
  times Appropriate reimbursement for contracted and non-contracted providers
  Interest payments Denials/denial letters

  BBA regulations 

  Provider reporting

  Y2K compliance

  	
   

  	
  Monthly

  	
   

  	
  Initial site 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

  	
   

  	
  ý Delegated

   

  o Not 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 site assessment
  utilizing approved oversight tool.

  Annual oversight assessment utilizing approved oversight tool

  Additional onsite reviews as warranted by theplan utilizing approved oversight tool

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

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  State Regulations

  	
   

  	
  ý Delegated

   

  o
  Not delegated

  	
   

  	
  Compliance with State
  Regulations for claims processing

  CCB 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

  	
   

  
	
  CPM Requirements

  	
   

  	
  ý
  Delegated

   

  o
  Not 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

  	
   

  	
  ý
  Delegated

   

  o
  Not 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

  	
   

  	
  o Delegated

   

  ý
  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

  	
   

  	
  ý Delegated

   

  o
  Not 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. 

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

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Check Production Processes

  	
   

  	
  ý
  Delegated

   

  o
  Not delegated

  	
   

  	
  Compliance with timely
  claims payments and

  IRS requirements including:

  Check production processes

  	
   

  	
  N/A

  	
   

  	
  Initial onsite assessment
  utilizing approved oversight tool.

  Annual oversight assessment
  utilizing

  	
   

  

 

52

 

	
  Function

  	
   

  	
  Delegation

  Status

  	
   

  	
  Medical
  Group

  Responsibility/

  Performance Measure

  	
   

  	
  Reporting

  Frequency

  	
   

  	
  PacifiCare
  Oversight

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Performing Provider
  Satisfaction Survey Process to settle claims in collections

  1099 production processes

  	
   

  	
   

  	
   

  	
  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

  	
   

  	
  ý
  Delegated

   

  o
  Not 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

  	
   

  	
  ý Delegated

   

  o Not 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 me plan utilizing approved
  oversight tool

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

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Encounter Data

  	
   

  	
  ý
  Delegated

   

  o
  Not 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.

 

53

 

QUALITY IMPROVEMENT DELEGATION GRID

 

	
  Function

  	
   

  	
  Delegation

  Status

  	
   

  	
  Medical
  Group Responsibility/

  Performance Measure

  	
   

  	
  Reporting

  Frequency

  	
   

  	
  PacifiCare

  Oversight

  	
   

  
	
  Program
  structure

  	
   

  	
  Not Delegated

  	
   

  	
  Medical Group’s required to
  maintain the following.

  CM 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 barners to
  improving key initiatives 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.

 

 

	
   

  	
  PACIFICARE
  OF CALIFORNIA

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ GREG S. WRIGHT

  	
   

  
	
   

  	
  Name:

  	
  Greg
  S. Wright

  
	
   

  	
  Title:

  	
  Vice
  President, Network Management

  
	
   

  	
  Date:

  	
  4/30/03

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MEDICAL
  GROUP

  GATEWAY PHYSICIANS MEDICAL

  ASSOCIATES

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ MIKE OLSON

  	
   

  
	
   

  	
  Name:

  	
  MIKE OLSON

  	
   

  
	
   

  	
  Title:

  	
  NETWORK DEVELOPMENT DIRECTOR

  	
   

  
	
   

  	
  Date:

  	
  4/16/03

  	
   

  
									

 

54

 

PACIFICARE OF CALIFORNIA

 

MEDICAL GROUP/IPA SERVICES
AGREEMENT

(PROFESSIONAL CAPITATION)

 

EXHIBIT 4

 

DIVISION OF FINANCIAL
RESPONSIBILITY

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

 

The
following matrix outlines the Division of Financial Responsibility (DFR)
between PacifiCare, Capitated Medical Group and the Hospital, 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 Manuals for
administrative/operational clarification. Member benefit information and
eligibility should be verified prior to the provision of services.

 

Division of Financial
Responsibility

 

KEY: M
- Opt-out to Medicare benefit for Hospice

 

	
  Service
  Description

  	
   

  	
  Medical

  Group

  	
   

  	
  Hospital

  Incentive

  Program

  	
   

  	
  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

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  

 

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

 

55

 

Division of Financial Responsibility

 

KEY
M=
Opt-Out to Medicare benefit for Hosptee

 

	
  Service Description

  	
   

  	
  Medical

  Group

  	
   

  	
  Hospital

  Incentive

  Program

  	
   

  	
  PacifiCare

  	
   

  
	
  Diagnostic Tests
  - OP - Fac & Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  DME – IP

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  DME, Ostomy
  Colostomy Supplies. Prosthetics. Orthotics – OP

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Emergency Room -
  OP – Fac

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Emergency Room -
  OP – E.R. Phys.

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Endoscopic Studies
  - IP – Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Endoscopic
  Studies - OP – Fac

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Endoscopic
  Studies - OP – Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Family Planning
  - Abortions - OP – Fac

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Family Planning
  - Abortions - OP – Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Family Planning
  - Contraceptive Devices - Insertion - OP – Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Family Planning
  - Contraceptive Devices - Non-Rx 

  (eg. Norplant/IUD) - 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

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Hearing
  Aids/Molds – OP

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Hearing
  Screening (Audiologic Evaluation) – OP

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Hemodialysis /
  Dialysis - IP & OP – Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Hemodialysis Dialysis
  - OP – Fac (including all drugs)

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Home Health Care / Homebound Infusion Therapy - OP – Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

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

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Hospice Services (Medicare) – IP – Fac & Prof – SH

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Hospice Services - Prof – CO

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Hospitalization
  Services - IP – Fac

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Immunizations
  & Inoculations (Medically Necessary) – OP

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Infusion therapy – 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 (casts, splints, bandages) - Office – OP

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Medication - Prescription – OP

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

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

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  MENTAL HEALTH: AB88 Benefits (Mental Health Parity applies to CO only)

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Mental Health – IP & OP - Fac – CO

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Mental Health – IP & OP - Prof – CO

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  MENTAL HEALTH: Secure Horizons
  and Commercial 

  (non AB88 Benefits)

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  

 

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

 

56

 

Division
of Financial Responsibility

 

KEY   M - Opt-out to Medicare benefit
for Hospice

 

	
  Service Description

  	
   

  	
  Medical

  Group

  	
   

  	
  Hospital

  Incentive

  Program

  	
   

  	
  PacifiCare

  	
   

  
	
  Mental Health –
  IP and OP – Fac – CO

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Mental Health –
  IP and OP – Fac – SH

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Mental Health –
  IP and OP – Prof – CO

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Mental Health –
  IP and 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 Service) - IP & OP – Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Prosthetics -
  Surgical Implants – OP

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Radiation
  Therapy – IP & OP – Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Radiation
  Therapy – OP – Fac and/ or freestanding facility

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Radiology
  (Diagnostic Only) - OP – Fac

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  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

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Transplant
  Candidacy and Maintenance: OP and IP Professional

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Transplant
  Candidacy and Maintenance: OP and IP Facility

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Transplant
  Evaluation (excludes corneal); OP and IP Professional. See Note (1).

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Transplant
  Evaluation (excludes corneal); OP and IP Facility. See Note (1)

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Transplant
  Procedure and Procurement (excludes corneal); OP and IP Professional Services.
  See Note (1).

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Transplant
  Procedure and Procurement (excludes corneal); OP and IP Facility. See Note
  (1).

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Transplant
  Related Transportation and Housing - NPTN specific benefit. See Note(1).

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Transplant
  Follow-up (excludes corneal); OP and IP Professional; Year 1. See Note (1).

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Transplant
  Follow-up (excludes corneal); OP and IP Facility; Year 1. See Note (I)

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Transplant Years
  2 – 5 Follow-up (excludes corneal); OP and IP Professional

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Transplant Years
  2 – 5; Follow-up (excludes corneal); OP and IP Facility

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  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.

 

57

 

Notes:

 

(1)           PacifiCare responsibility for transplant services is limited
to those services defined in this Agreement, the DFR and Attachment A, Exhibit
4.

 

58

 

PACIFICARE OF CALIFORNIA

 

MEDICAL GROUP IPA
SERVICES AGREEMENT

(PROFESSIONAL CAPITATION)

 

EXHIBIT 4

ATTACHMENT A

 

NATIONAL
PROVIDER TRANSPLANT NETWORK

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

 

Division of Financial Responsibility.  The Division of Financial Responsibility
(DFR), attached to this Agreement as Exhibit 4, shall serve as the specific
designation of financial risk for the Medical Group. Hospital Incentive
Programs and PacifiCare for Transplant Services (other than skin or ophthalmic
transplants, which are addressed separately in the DFR):

 

I.      Designated NPTN Components (Phases) of Care - General

 

Transplant Services are generally
described in the following components of care:

 

•      Transplant
Evaluation

•      Transplant
Candidacy and Maintenance

•      Transplant
Procedure and Procurement

•      Post-Transplant
Follow-up (Year 1)

•      Post-Transplant
Follow-up (Years 2-5)

 

II.    Transplant Services Phases of Care Definitions and Service
Components.

 

1.     SOLID ORGAN TRANSPLANTATION. 
The solid organ Transplant Services are segregated into the
following components:

 

a)             TRANSPLANT
EVALUATION PHASE.  Pre-transplant
medically necessary services required to assess and evaluate the Member to
determine acceptance to transplant program. This phase ends upon acceptance or
denial into the transplant program. This Phase shall include:

 

•      Consultation
with surgeon(s), psychiatrist(s), specialist(s), transplant coordinator(s),
social services.

 

•      Hematology, blood banking, serology,
chemistry, histocompatibility.

 

•      X-rays, pulmonary function tests, skin
tests, leukopheresis consultation, CT scan, tissue typing, MRI.

 

•      Inpatient or outpatient, including
professional, room and board, nursing, pharmacy and all other ancillary
services.

 

b)  TRANSPLANT
CANDIDACY AND MAINTENANCE PHASE: Services necessary to assess referral for
formal evaluation for Transplant Services and Medically Necessary inpatient
and/or outpatient services, in order to maintain the Member’s health prior to a
transplant.

 

59

 

c)   TRANSPLANT
PROCEDURE AND PROCUREMENT PHASE. 
Transplant related services from the day before a transplant is
performed through discharge. Includes all hospital, physician, ancillary,
transportation, acquisition costs and other services necessary to acquire a
cadaver or living transplantable human organ for transplantation into
designated Member. This Phase includes retransplantation. This Phase includes:

 

•      Inpatient or outpatient,
including professional, room and board, nursing, pharmacy and all other
ancillary services for recipient and living donor

 

•      Surgical transplant and other
surgical procedures during admission

 

•      Organ and tissue procurement and
transportation costs related to procurement

 

•      Donor testing and identification
and preparation or organ and tissue

 

d) POST-TRANSPLANT FOLLOW-UP (YEAR 1).  Transplant-related Medically Necessary
services rendered to recipient for follow-up for up to 365 days post discharge
for recipient and 90 days post discharge for living donor. This Phase includes:

 

•      Inpatient or
outpatient, including professional, room and board, nursing, pharmacy and all
other ancillary services for recipient and donor.

 

•      Readmissions
related to transplant complications

 

•      Transplant
rejection diagnosis and treatment

 

•      Transplant related complications
(medical care necessary related directly to transplant or re-transplantation)

 

e)             POST-TRANSPLANT FOLLOW-UP (YEARS
2-5).  Transplant-related Medically
Necessary services provided after the post-transplant follow-up period
described above.

 

2.             AUTOLOGOUS
HEMOPOETIC STEM CELL TRANSPLANTATION.  The autologous
hemopoetic stem cell Transplant Services arc segregated into the following
components:

 

a)             TRANSPLANT EVALUATION
PHASE.  Begins with initial consult with
transplant physician through day prior to myeoloblative or immunoablative
therapy beginning. This phase ends upon acceptance or denial into the transplant
program. The Evaluation Phase shall include:

 

60

 

•      Consultation with transplant physician(s), psychiatrist(s),
specialist(s), transplant coordinator(s), social services.

 

•      Hematology, blood banking, serology, chemistry,
histocompatibility.

 

•      X-rays,
pulmonary function tests, skin tests, leukopheresis consultation, CT scan,
tissue typing, MRI.

 

•      Restaging of disease

 

•      Inpatient or outpatient,
including professional, room and board, nursing, pharmacy and all other
ancillary services.

 

•      IV or oral medications for
mobilization

 

•      Bone marrow harvest/stem cell
collection

 

•      Stem cell cryopreservation and
storage

 

b)     TRANSPLANT
CANDIDACY AND MAINTENANCE PHASE. 
Services necessary to assess referral for formal evaluation for
Transplant Services and Medically Necessary inpatient and/or outpatient
services, in order to maintain the Member’s health prior to transplant.

 

c)     TRANSPLANT
PROCEDURE PHASE.  From day myeoloblative
or immunoablative therapy begins through discharge.

 

•      Inpatient
or ourpatient, including professional, room and board, nursing, pharmacy and
all other ancillary services for recipient.

 

•      Marrow ablative or
immunoablative therapy (total body irradiation and/or chemotherapy)

 

•      Marrow or cord acquisition

 

•      Transplant

 

d)    POST-TRANSPLANT FOLLOW-UP (YEAR 1).  Transplant related Medically Necessary
services rendered to recipient for follow-up for up to 365 days post discharge.

 

•      Inpatient or outpatient,
including professional, room and board, nursing, pharmacy and all other ancillary
services for recipient.

 

•      Transplant physician visits

 

•      Laboratory testing

 

61

 

•      Radiology exams

 

•      Retransplantation

 

•      Readmissions related to
transplant complications

 

•      Treatment for delayed stem cell
engraftment (GCSF)

 

•      Transplant related complications
(medical care necessary related directed to transplant or re-transplantation)

 

3.             ALLOGENEIC
HEMOPOETIC STEM CELL TRANSPLANTATION (Related or Unrelated).

The allogenic
hemopoetic stem cell Transplant Services are segregated into the following
components:

 

a)             TRANSPLANT EVALUATION
PHASE.  Pre-transplant Medically
Necessary Services required to assess and evaluate the Member to determine
acceptance to the transplant program. This phase ends upon acceptance or denial
into the transplant program. This Phase shall include:

 

•      Consultation with transplant
physician(s), psychiatrist(s), specialist(s), transplant coordinator(s), social
services.

 

•      Hematology, blood banking,
serology, chemistry, histocompatibility

 

•      X-rays, pulmonary function
tests, skin tests, leukopheresis consultation, CT scan, tissue typing, MRI.

 

•      Restaging of disease

 

•      HLA typing

 

•      Inpatient or outpatient,
including professional, room and board, nursing, pharmacy and all other ancillary
services.

 

•      IV or oral medications for
mobilization

 

•      Bone
marrow harvest/stem cell collection

 

•      Stem cell cryopreservation and
storage

 

•      NMDP or cord bank search

 

•      NMDP or cord bank testing of
donors

 

b)     TRANSPLANT
CANDIDACY AND MAINTENANCE PHASE. 
Services necessary to assess referral for formal evaluation for
Transplant Services. Medically necessary inpatient and/or outpatient services,
in order to maintain the Member’s health prior to transplant.

 

62

 

c)     TRANSPLANT PROCEDURE AND PROCUREMENT PHASE. From day
myeoloblative or immunoablative therapy begins through discharge.

 

•      Inpatient
or outpatient, including professional, room and board, nursing, pharmacy and
all other ancillary services for recipient.

 

•      Marrow
ablative or immunoablative therapy (total body irradiation and/or chemotherapy)

 

•      Transplant

 

d)     POST-TRANSPLANT CARE. 
Transplanted related medically necessary services rendered to recipient
for follow-up for up to 365 days post discharge.

 

•      Inpatient
or outpatient, including professional, room and board, nursing, pharmacy and
all other ancillary services for recipient.

 

•      Transplant
physician visits

 

•      Laboratory
testing

 

•      Radiology
exams

 

•      Retransplantation

 

•      Readmissions
related to transplant complications

 

•      Transplant
related complications (medical care necessary related directly to transplant or
re-transplantation)

 

•      Treatment
for GVHD (liver biopsy, hepatic panel, medications)

 

•      CMV,
PCP, VZV prophylaxis

 

•      Treatment
for delayed stem cell engraftment

 

4.             TRANSPORTATION AND HOUSING.  Transportation and local housing may be a Covered Service for
NPTN Members. All such services must be pre-authorized by PacifiCare’s Case
Management Department.

 

Use of Defined Terms.  Terms utilized in this Amendment shall have
the same meaning set forth in the definitions to the Agreement.

 

63

 

Agreement Remains in Full Force and
Effect.  Except as
specifically amended by this Amendment, the Agreement shall continue in full
force and effect.

 

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

 

	
   

  	
  PACIFICARE OF CALIFORNIA

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Greg S. Wright

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Greg
  S. Wright

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  Vice
  President, Network Management

  
	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
  4/30/03

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MEDICAL
  GROUP

  GATEWAY PHYSICIANS MEDICAL ASSOCIATES

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /s/
  Mike Olson

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name:
  

  	
  MIKE OLSON

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  NETWORK DEVELOPMENT DIRECTOR

  
	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
  4/16/03

  	
   

  
									

 

64

 

PACIFICARE OF CALIFORNIA

 

MEDICAL GROUP IPA SERVICES AGREEMENT

 

EXHIBIT 4

ATTACHMENT B

 

2003 SELF-INJECTABLE CARVE OUT PROGRAM (SICOP)

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

 

PacifiCare offers to Medical Group the 2003 SICOP for
Secure Horizons and Commercial members. If Medical Group elects to participate,
the 2003 SICOP places financial responsibility for the self-injectable drugs
listed on Attachment B-1 to this Exhibit 4, Attachment B (the “Self-Injectables”)
on PacifiCare. The 2003 SICOP is standard, and thus offered without potential
for any modification. Any previous self-injectable carve out programs that do
not meet the standard requirements of the 2003 SICOP are hereby discontinued.

 

The key provisions of the SICOP are as follows:

 

•      The carve out
covers only the Self-Injectables.  The
SICOP does not cover the Self-Injectables when provided in the physician office
setting or by clinical staff in the home or other setting.

 

•      PacifiCare and
its Affiliate Prescription Solutions may at their sole discretion during the
term of the agreement amend the list of Self-Injectables on Attachment A–1 to
add new therapeutic drugs or therapeutic substitutes. The SICOP does not cover
all self-injectable drugs which might be a covered benefit.

 

•      The attached
flowchart and procedure document outline the SICOP process in greater detail.

 

•      The valuations
associated with the SICOP have been provided to Medical Group. In the event
Medical Group chooses to participate in the SICOP, PacifiCare will deduct the
amounts set forth in Product Attachment A related to the SICOP from Medical
Group’s monthly Capitation Payments.

 

•      In the event
Medical Group elects not to participate in the SICOP, Medical Group shall so
indicate by initialing here:

 

MO         Medical Group elects not to participate
in the SICOP.

 

MIKE OLSON

NETWORK DEVELOPMENT DIRECTOR

 

65

 

 

66

 

2003
Self-Injectable Carve-Out Program

Procedures
for Ordering

 

I.              Requesting an Injectable Medication

 

The ordering physician is encouraged to phone in injectable
prescription request to Prescription Solutions Prior Authorization Department
(800) 711-4555 option 1

 

•      The Injectable Authorization Form
is to be completed, signed, and faxed to Prescription Solutions (800)
853-3844 for authorization.

•      This form serves as a request for
authorization and a legal prescription for the injectable pharmacy vendor.

•      Indicate where to send the medication
(patient’s home or physician office)

 

II.            Approved

 

•      Prescription Solutions (Rx Solutions) will
fax a copy of the approved Injectable Authorization Form to the physician’s
office.

•      A copy of the authorized form is forwarded to
the PCC’s injectable pharmacy vendor.

 

III.           Denied

 

•      Rx Solutions will fax a copy of the denied
Injectable Authorization Form to the physician’s office.

•      Rx Solutions will mail a denial letter to the
patient’s home.

•      The patient or physician can request an Appeal
as deemed necessary.

 

IV.           Education

 

•      Patient Education will be
provided by the physician or physician staff member.

 

V.            Delivery of product to patient

 

•      The Injectable Pharmacy Vendor will contact
the patient and arrange the delivery of the injectable.

 

Fulfillment Time

 

	
  Day and Time when an authorized

  prescription is received by Injectable

  Pharmacy Vendor **

  	
   

  	
  Expected turn around time for
  delivery.

  

 

67

 

	
  Monday through
  Thursday before 4:00pm

  	
   

  	
  Within 24 hours

  
	
  Monday through
  Wednesday after 4:00pm

  	
   

  	
  Within 48 hours

  
	
  Thursday after 4:00pm

  	
   

  	
  Delivery will be made Tuesday of the following week*

  
	
  Friday

  	
   

  	
  Delivery will be made
  Tuesday of the following week*

  

* Unless special
arrangements are made with Injectable Pharmacy Vendor.

 

**
Order is a complete and valid order.

 

68

 

EXHIBIT 4, ATTACHMENT B.

ATTACHMENT B-l

 

PacifiCare of California

2003 Self-Injectable Carve-out Program (SICOP)

 

 

The
following product-specific list of drugs is applicable to the 2003 SICOP
Program:

 

Commercial:

Aranesp

Avonex

Betaserone

Copaxone

Enbrel

Epogen/Procrit

Fragmin

Growth
Hormone

Innohep

Kineret

Leukine

Lovenox

Neulasta

Neumega

Neupogen

Peg
Intron

Rebetron

Serostim

 

Note:   PacifiCare
Retiree Members are covered under the Commercial Drug List identified above.

 

69

 

PACIFICARE OF CALIFORNIA

 

MEDICAL GROUP IPA SERVICES
AGREEMENT

(SPLIT CAPITATION)

 

EXHIBIT 5

 

QUALITY INCENTIVE PROGRAM

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

 

1.             Introduction.

 

This
Exhibit sets forth the terms of a quality incentive program being implemented
by PacifiCare. The program is designed to compensate Medical Group for efforts
it takes to improve the quality of services provided to PacifiCare Members as
reflected by data measured by PacifiCare, all as described below (the “Quality
Incentive Program” or the “QIP”).

 

The
Quality Incentive Program provides additional compensation to Medical Groups
which are successful in improving and maintaining certain levels of patient
safety, patient satisfaction and quality of care. The Quality Incentive Program
tracks specific performance measures and calculates payments to the Medical
Group based on aggregating and paying specific amounts for separate performance
measures, as described in this Exhibit.

 

2.             Definitions.

 

In
addition to other terms defined in this Exhibit or in the Agreement, the
following terms shall have the meanings set forth below:

 

2.1           Eligible
Membership shall be the monthly Secure Horizons Members reflected on
the PacifiCare Eligibility List for the month preceding the month in which the
applicable QIP Payment will be made. The determination of Eligible Membership
shall not be changed at any later time to reflect retroactive membership
adjustments otherwise made by PacifiCare in connection with its Managed Care
Plans. Additionally, Eligible Membership shall exclude Members who had been
transferred to Medical Group in a group transfer from another PacifiCare
Participating Provider within six (6) months prior to the date of the
applicable QIP Payment.

 

2.2           Leapfrog as
used in the Table shall refer to data reported to PacifiCare on the website
maintained by The Leapfrog Group and supplemental data reviewed by PacifiCare
as reported by the California Office of Statewide Health Planning and
Development.

 

2.3          Measurement Component shall mean the Measures described in the QIP Table.

 

70

 

2.4           Measurement Period is the period for which
PacifiCare shall measure data in order to calculate the applicable QIP Payment.
For the initial and subsequent QIP Payment, the Measurement Period shall vary
as defined in Section 3. QIP Table.

 

2.5           PMPM Component Payment shall be the amount
attributable to each Measurement Component as specified in the Table and shall
be earned by Medical Group only if Medical Group meets or exceeds the
Performance Target for the applicable Measurement Component.

 

2.6           PMPM Payment Rate shall be the total of the PMPM
Component Payments earned by Medical Group for the applicable Measurement
Period.

 

2.7           QIP Payments are the quarterly payments made
pursuant to the Quality Incentive Program.

 

2.8           Table means the table or tables set
forth below specifying the Measurement Components, Performance Targets,
Measurement Period, Data Source, Members Measured and PMPM Component Payment.

 

2.9           Performance Target is the performance target for
each Measurement Component as defined in Section 3, QIP Table. Performance
Targets are determined by the sole discretion of PacifiCare.

 

Members
Measured is defined as described in Section 3. For Measurement Components in
which Members Measured is a combination of Commercial and Secure Horizons
membership, PacifiCare shall perform calculations utilizing a weighted average
of the Commercial and Secure Horizons membership.

 

3.     QIP Table.

 

	
  Measure

  	
   

  	
  Performance
  Target

  	
   

  	
  Measurement

  Period

  	
   

  	
  Data
  Source

  	
   

  	
  PMPM
  Component

  Payment

  	
   

  	
  Members
  Measured 

  	
   

  
	
  Leapfrog Initiative Participation

  	
   

  	
  85% of elective admissions at hospital self-reported
  on Leapfrog website

  	
   

  	
  12 month period ending six months prior to month of
  payout

  	
   

  	
  Leapfrog website

  	
   

  	
  $

  	
  .1258

  	
   

  	
  All Commercial and Secure Horizons assigned to PMG

  	
   

  
	
  CABG volume threshold (per PHS TAG threshold),
  combined with CCMRP risk-adjusted CABG outcomes

  	
   

  	
  85% of CABG admissions at qualifying hospitals with
  >100 CABGs in latest reported year (or per latest OSHPD data available)
  AND NOT CCMRP “Worse Than Expected” outcome status.

  	
   

  	
  12 month period ending six months prior to month of
  payout

  	
   

  	
  Leapfrog website, supplemented by OSHPD data

  	
   

  	
  $

  	
  .1258

  	
   

  	
  All Commercial and Secure Horizons assigned to PMG

  	
   

  
	
  PTCA volume threshold (per PHS TAG threshold)

  	
   

  	
  85% of PTCA admissions at hospitals with >200
  PTCAs in latest reported year (or per latest OSHPD data available)

  	
   

  	
  12 month period ending six months prior to month of
  payout

  	
   

  	
  Leapfrog website, supplemented by OSHPD data

  	
   

  	
  $

  	
  .1258

  	
   

  	
  All Commercial and Secure Horizons assigned to PMG

  	
   

  

 

	
  Measure

  	
   

  	
  Performance
  Target

  	
   

  	
  Measurement

  Period

  	
   

  	
  Data Source

  	
   

  	
  PMPM
  Component

  Payment

  	
   

  	
  Members
  Measured

  	
   

  
	
  Computerized patient entry

  	
   

  	
  85% of elective admissions at hospitals with
  self-reported compliance on Leapfrog website

  	
   

  	
  12 month period ending six months prior to month of
  payout

  	
   

  	
  Leapfrog website,
  supplemented by OSHPD data

  	
   

  	
  $

  	
  .1258

  	
   

  	
  All Commercial and Secure Horizons assigned to PMG

  	
   

  
	
  Intensive ICU staffing

  	
   

  	
  85% of elective admissions at hospitals with
  self-reported compliance on Leapfrog website

  	
   

  	
  12 month period ending six months

  	
   

  	
  Leapfrog website,
  supplemented by

  	
   

  	
  $

  	
  .1258

  	
   

  	
  All Commercial and Secure Horizons assigned to PMG

  	
   

  

 

71

 

	
   

  	
   

  	
   

  	
   

  	
  prior to month of payout

  	
   

  	
  OSHPD data

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  PEP-C Project Participation
  

  	
   

  	
  35% of electric admissions
  at hospitals participating in PEP-C Project  

  	
   

  	
  2002 Survey

  	
   

  	
  California Health and
  Foundation

  	
   

  	
  $

  	
  1253

  	
   

  	
  All Commercial and Secure
  Horizons assigned to PMG  

  	
   

  
	
  Breast Cancer screening  

  	
   

  	
  70.6% screening performed
  on members measured

  	
   

  	
  24 month period ending six
  months prior to payment period  

  	
   

  	
  PacifiCare Quality Index
  and Provider Profile

  	
   

  	
  $

  	
  2265

  	
   

  	
  Females age 52-69

  	
   

  
	
  Cervical Cancer Screening  

  	
   

  	
  51.0% screening performed
  on members measured

  	
   

  	
  36 month period ending six
  months prior to payment period  

  	
   

  	
  PacifiCare Quality Index
  and Provider Profile  

  	
   

  	
  $

  	
   2265

  	
   

  	
  Females age 21-64

  	
   

  
	
  Childhood Immunizations  

  	
   

  	
  45.0% of recommended
  Immunizations performed on members measured

  	
   

  	
  12 month period ending six
  months prior to payment period  

  	
   

  	
  PacifiCare Quality Index
  and Provider Profile

  	
   

  	
  $

  	
  2265

  	
   

  	
  Children age 2

  	
   

  
	
  HgbA is Testing - Diabetes  

  	
   

  	
  72. 0% Testing performed on
  members measured

  	
   

  	
  12 month period ending six
  months prior to payment period  

  	
   

  	
  PacifiCare Quality Index
  and Provider Profile  

  	
   

  	
  $

  	
  2265

  	
   

  	
  Diabetic members age 31 or
  older

  	
   

  
	
  LDL Cholesterol Testing -CAD  

  	
   

  	
  1.4% Testing performed on
  members measured

  	
   

  	
  12 month period ending six
  months prior to payment period  

  	
   

  	
  PacifiCare Quality Index
  and Provider Profile

  	
   

  	
  $

  	
  2265

  	
   

  	
  Diabetic members age 31 or
  older

  	
   

  
	
  Satisfaction with PMC  

  	
   

  	
  69.0% overall satisfaction
  level

  	
   

  	
  2002 Member Satisfaction
  Survey  

  	
   

  	
  PacifiCare Member
  Satisfaction Survey

  	
   

  	
  $

  	
  2265

  	
   

  	
  All Commercial and Secure
  Horizons members assigned to PMG  

  	
   

  
	
  Satisfaction with PCP

  	
   

  	
  ??.2% overall satisfaction
  level

  	
   

  	
  2002 Member Satisfaction
  Survey  

  	
   

  	
  PacifiCare Member
  Satisfaction Survey

  	
   

  	
  $

  	
  2265

  	
   

  	
  All Commercial and Secure
  Horizons members assigned to PMG  

  	
   

  
	
  Satisfaction with Specialist  

  	
   

  	
  73.4% overall satisfaction
  level

  	
   

  	
  2002 Member Satisfaction
  Survey

  	
   

  	
  PacifiCare Member
  Satisfaction Survey

  	
   

  	
  $

  	
  2265

  	
   

  	
  All Commercial and Secure
  Horizons members assigned to PMG  

  	
   

  
	
  Satisfaction
  with Referral Process

  	
   

  	
  68.9% overall satisfaction level 

  	
   

  	
  2002 Member Satisfaction Survey 

  	
   

  	
  PacifiCare Member Satisfaction Survey 

  	
   

  	
  $

  	
  2265 

  	
   

  	
  All Commercial and Secure Horizons members assigned
  to PMG 

  	
   

  
	
  PCP Communicates Effectively  

  	
   

  	
  63.1% overall satisfaction
  level  

  	
   

  	
  2002 Member Satisfaction
  Survey  

  	
   

  	
  PacifiCare Member
  Satisfaction Survey  

  	
   

  	
  $

  	
  2265

  	
   

  	
  All Commercial and Secure
  Horizons members assigned to PMG

  	
   

  

 

4.     Calculation and Payment of QIP Payments.  The following calculations and payment mechanisms shall apply:

 

(a)           Payment Frequency.  QIP Payments shall be paid to Medical Group quarterly. The QIP
Payments shall be made together with Medical Group’s Capitation Payment for the
months of July 2003, October 2003, January 2004, and April 2004.

 

(b)           Payment
Calculation.  Each quarterly QIP
Payment shall equal: the Eligible Membership multiplied by three (3), the
product of which shall be multiplied by the PMPM Payment Rate.

 

(c)           Criteria for Determining QIP
Payment Eligibility.  In order to comprehensively assess Medical
Group’s improvements in the Measurement Components, data on services

 

72

 

provided to both Commercial Health Plan
Members and Secure Horizons Health Plan Members will be measured in connection
with the Quality Incentive Program. Payments shall be based solely on Eligible
Membership, which only includes Secure Horizons Members. However, payments for
certain Measurement Components, if earned, shall be made from commercial
capitation funds.

 

5.             QIP
Payments Final.  PacifiCare’s
calculation of the QIP Payment shall be final. Medical Group recognizes that
the measurement of the QIP data is subject to variation and reasonable
statistical and operational error. Medical Group acknowledges that PacifiCare
would not be willing to offer the Quality Incentive Program if PacifiCare’s
calculation of the QIP Payments would expose PacifiCare to increased risk of
disputes and litigation arising out of PacifiCare’s calculation of the QIP
Payment. Accordingly, in consideration of PacifiCare’s agreement to offer the
Quality Incentive Program to Medical Group, Medical Group agrees that Medical
Group will have no right to dispute PacifiCare’s determination of the QIP
Payment, including determination of any data or the number of Eligible Members.

 

6.             QIP
Programs for Future Periods. 
PacifiCare in its sole and absolute discretion may implement quality
incentive programs for periods from and after January 1, 2004. Any such
programs shall be on terms determined by PacifiCare. PacifiCare currently
intends to provide for a quality incentive program for calendar year 2004.
Until PacifiCare and Medical Group enter into a written agreement with respect
to any such new program for calendar year 2004, or thereafter, no such program
shall be binding upon PacifiCare.

 

7.             Cancellation
and Termination of QIP. 
The terms of this Exhibit shall be cancelled and of no effect if Medical
Group does not participate in the Secure Horizons Health Plan as of January 1,
2003. Additionally, the Quality Incentive Program shall terminate at such time
as Medical Group no longer is assigned eligible Membership of at least both one
thousand (1,000) Commercial Health Plan Members and one hundred (100) Secure
Horizons Health Plan Members. In the event of such termination, the QIP
Payments shall be prorated by changing the multiple “3” in Paragraph 4(b) above
to be the number of whole months between the last quarterly QIP Payment and the
month of termination. (Example: Last QIP Payment is July 2003 and the
termination date is September, the “3” in Paragraph 4(b) would be changed to
“2”.)

 

8.             Effect of Termination of
Agreements.  In the event of the
termination of the Agreement, for any reason, no QIP Payments shall be earned
or made following termination of the Agreement. In the event that the Medical
Group’s participation in the Secure Horizons Health Plan terminates prior to
April 10, 2004 but the Agreement continues to be in effect and apply to
Commercial Health Plan Members, QIP Payments shall continue to be made through
the April 2004 quarterly period, with the QIP Payments to be made based upon
the Eligible Members for the month preceding the effective date of the termination
of the Medical Group’s participation in the Secure Horizons Health Plan under
the Agreement.

 

73

 

 

	
   

  	
  PACIFICARE
  OF CALIFORNIA

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Greg S.
  Wright

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   Greg S. Wright

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  Vice
  President, Network Management

  
	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
  04 /30/03

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  MEDICAL GROUP

  GATEWAY PHYSICIANS

  MEDICAL ASSOCIATES

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Mike Olson

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  MIKE OLSON

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  NETWORK
  DEVELOPMENT DIRECTOR

  
	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
  4/16/03

  	
   

  
									

 

74

 

PACIFICARE OF CALIFORNIA

 

MEDICAL GROUP IPA SERVICES
AGREEMENT

 

EXHIBIT 6

WOMEN’S HEALTH BONUS PROGRAM

(This Exhibit 6 is an integral
part of this Agreement)

 

1.     Introduction.

 

This Exhibit sets forth the terms of a
bonus program being implemented by PacifiCare. The program is designed to
compensate Medical Group and its Participating Providers for efforts taken to
improve the accessibility of women’s health services and the stability of
PacifiCare’s women’s health network as reflected by data measured by
PacifiCare, all as described below (the “Bonus Program”).

 

The Bonus Program will apply only to
Medical Group’s provision of services in certain counties for 2003. The Bonus
Program shall not be available to Medical Group unless: 1) Medical Group and
PacifiCare were parties to the Commercial Health Services Agreement for the
entire 2002 calendar year; 2) Membership in each unique PacifiCare Dec is a
minimum of 1,000 Commercial members throughout calendar year 2003; 3) Medical
Group must meet the minimum threshold for number of physicians (OB/GYNs and
Pediatricians); and, 4) The other Bonus Program requirements are met as
outlined below.

 

2.             Bonus
Program Terms.  Medical Group and
its Participating Providers will be eligible for the following separate
payments under the Bonus Program: (a) access bonus payments relating to
obstetrical/gynecological services and pediatric services, (b) stability bonus
payments relating to obstetrical/gynecological services, (c) stability bonus
payments relating to pediatric services. Such payments may be earned upon
satisfaction of the conditions set forth in this Exhibit.

 

a.             Access
Bonus.  PacifiCare shall
make “Access Bonus” payments with respect to each Obstetrician-Gynecologist and
each Pediatrician who is available to accept additional PacifiCare members and
who maintains extended office hours throughout calendar year 2003.
Determinations whether the provider is available to accept additional
PacifiCare members and is maintaining extended office hours shall be determined
by calls made periodically by PacifiCare to the provider’s office. Payments
shall be made to Medical Group for Obstetrician-Gynecologists and Pediatricians
who are independent contractors of Medical Group or employed by Medical Group.
The amount of the Access Bonus payments shall be: (i) One Hundred Twenty-Five
Dollars ($125.00) for each delivery (without regard to

 

75

 

multiple births) performed by the
Obstetrician-Gynecologist if such provider is determined to have been available
to accept additional PacifiCare members and to have maintained extended office
hours throughout the entire 2003 calendar year; and (ii) a One Thousand Dollar
($1,000) single payment for each pediatrician determined to have been available
to accept additional PacifiCare members and to have maintained extended office
hours throughout the entire 2003 calendar year. Pediatricians who participate
in more than one Medical Group or in more than one unique PacifiCare Dec, is
only eligible for a one time payment.

 

b.             Stability
Bonus – Obstetrical/Gynecological Services.  PacifiCare shall make “Stability Bonus” payments directly to
Medical Group if (i) Medical Group maintains at least one
Obstetrician/Gynecologist for each thirteen thousand (13,000) patients assigned
to Medical Group for all plans and (ii) Medical Group shall, as of December 31,
2003 contract with not less than ninety percent (90%) of the same
obstetrician/gynecologists contracting with Medical Group as of October 1,
2002. Determinations whether the Medical Group meets the foregoing criteria
shall be determined by PacifiCare’s review of information in PacifiCare’s
provider directories or system.

 

Bonus Payment - The amount of the
Stability Bonus shall be Twenty Cents ($0.20) per commercial health plan member
per month, not adjusted for age/sex/plan-type factors, for the calendar year
2003.

 

c.             Stability
Bonus – Pediatric Services. 
PacifiCare shall make Stability Bonus payments directly to Medical Group
if (i) Medical Group maintains one Pediatrician for every twelve thousand
patients, and (ii) Medical Group as of December 31, 2003 contract with not less
than ninety percent (90%) of the pediatricians contracting with Medical Group
as of October 1, 2002. Determinations whether the Medical Group meets the
foregoing criteria shall be determined by PacifiCare’s review of information in
PacifiCare’s provider directories. PacifiCare shall pay Medical Group Twenty
Cents ($0.20) for each Assigned Medical Group Member assigned to Medical Group.

 

Stability Payment.  The amount of the Stability Bonus shall be
Twenty Cents ($0.20) per commercial health plan member per month, not adjusted
for age/sex/plan-type factors, for the calendar year 2003.

 

d.             Additional
Terms.  “Extended office
hours” means physician office is accepting appointments before 8:30 a.m. or
after 5:30 p.m. at least one day per week. “Patients” for the purpose of
determining the Stability Bonus shall be the number of Medical Group patients,
regardless of payment source (e.g., private pay, HMO, PPO, etc.), who would be
reasonably expected to request services from Medical Group on an annual basis.

 

e.             Timing
of Bonus Payments.  All payments by
PacifiCare pursuant to the Bonus Program shall be made to Medical Group by May
15, 2004.

 

76

 

3.             Bonus Program
Summary.

 

	
  Measure 

  	
   

  	
  Payment to
  Medical Group

  	
   

  
	
  Access – OB/GYN

  	
   

  	
  $125.00
  per delivery

  	
   

  
	
  Access – Pediatrician

  	
   

  	
  $1,000.00
  one time payment.

  	
   

  
	
  OB-GYN Network Stability

  	
   

  	
  $0.20
  PMPM

  	
   

  
	
  Pediatrician Network Stability

  	
   

  	
  $0.20
  PMPM

  	
   

  

 

4.             Bonus
Program Payments Final. 
PacifiCare’s calculation of the Bonus Program Payment shall be final.
Medical Group recognizes that the measurement of the Bonus Program data is
subject to variation and reasonable statistical and operational error. Medical
Group acknowledges that PacifiCare would not be willing to offer the Bonus
Program if PacifiCare’s calculation of the Bonus Program Payments would expose
PacifiCare to increased risk of disputes and litigation arising out of
PacifiCare’s calculation of the Bonus Program Payment. Accordingly, in
consideration of PacifiCare’s agreement to offer the Bonus Program to Medical
Group, Medical Group agrees that Medical Group will have no right to dispute
PacifiCare’s determination of the Bonus Program Payment.

 

5.             Bonus
Programs for Future Periods. 
PacifiCare in its sole and absolute discretion may implement Bonus
programs for periods from and after January 1, 2004. Any such programs shall be
on terms determined by PacifiCare. Until PacifiCare and Medical Group enter
into a written agreement with respect to any such new program for calendar year
2004, or thereafter, no such program shall be binding upon PacifiCare.

 

6.             Cancellation
and Termination of Bonus Program.  The terms of this Exhibit shall be cancelled and of no effect if
Medical Group does not, for any reason, participate in PacifiCare’s Commercial
Health Plan through December 31, 2003.

 

77

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