Document:

exv10w28w2

 

EXHIBIT 10.28.2

AMENDMENT #1

BETWEEN

THE FLORIDA HEALTHY KIDS CORPORATION

AND

AMERIGROUP Florida, Inc.

     WHEREAS, FHKC did issue a Request for Proposals (“RFP”) in the Florida
Healthy Kids Corporation’s (“FHKC”) Health Insurance Program inviting
AMERIGROUP Florida, Inc. (“AmeriGroup”) as well as other entities, to submit
a proposal for the provision of those comprehensive health care services set
forth in the Request for Proposals; and

     WHEREAS, AMERIGROUP’S proposal in response to the Request for Proposals
was selected through a competitive bid process as one of the most responsive
bids; and

     WHEREAS, AMERIGROUP agrees that the Request for Proposals released by FHKC
in April 2004 and AMERIGROUP’ S response to that RFP are incorporated by
reference in this Amendment. If any conflict arises between the RFP or the
AMERIGROUP’S response to the RFP and the Agreement executed by the parties as
of October 1, 2003 (“Agreement”), the Agreement shall control, including any
provisions specifically modified by this Amendment;

     WHEREAS, FHKC is desirous of using AMERIGROUP’S provider network to
deliver comprehensive health care services to all eligible FHKC participants
in the additional counties of Pasco and Polk;

     WHEREAS, FHKC and AMERIGROUP have previously executed an Agreement and
have agreed to amend said Agreement to incorporate these new service areas
and to incorporate other required contractual changes;

     NOW, THEREFORE, in consideration of the premises and the mutual
covenants and promises contained herein, the parties agree as follows:

The Agreement between FHKC and AMERIGROUP is hereby modified to
include the following additional counties effective October 1,
2004: Pasco and Polk under the same terms of the Agreement except
as otherwise provided herein.

	II.	 	Section 2-6 is amended to read:
	 
	 	 	2-6     Marketing
	 
	 	 	FHKC will market the program primarily through the county school
districts. FHKC agrees that AMERIGROUP shall be allowed to
participate in any scheduled marketing efforts to include, but not
be limited to, any scheduled
	 
	 	 	 

			
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Exhibit 10.28.2

open house type activities. However, AMERIGROUP is prohibited from any
direct marketing to applicants or enrollees. AMERIGROUP may not
utilize FHKC’s logo, name or corporate identity unless such activity
or promotion has received prior written authorization from FHKC.
Written authorization must be received for every individual activity.

	III.	 	Section 3-3 is amended to read:
	 
	 	 	3-3     Fraud and Abuse
	 
	 	 	AMERIGROUP ensures that it has appropriate measures in place to
ensure against fraud and abuse. AMERIGROUP shall report to FHKC
any information on violations by subcontractors or participants
that pertain to enrollment or the payment and provision of health
care services under this Agreement.
	 
	 	 	AMERIGROUP agrees to allow FHKC access to monitor any fraud and abuse
prevention activities conducted by AMERIGROUP under this Agreement.
	 
	 	 	Applicants and enrollees who are found to no longer be eligible, have
submitted incorrect or fraudulent information or failed to submit
required information for eligibility determination may be disenrolled
immediately from the program by FHKC. Individuals who knowingly
provided false information in order to obtain benefits under the
Healthy Kids or KidCare Program may be subject to prosecution under
section 414.39, Florida Statutes. Should the AMERIGROUP become aware
of any such activity, the AMERIGROUP shall report its findings to FHKC
for investigation.
	 
	IV.	 	Section 3-4 is amended to read: 3-4
	 
	 	 	     Membership Materials
	 
	 	 	AMERIGROUP agrees that it shall not utilize the marketing materials,
logos, trade names, service marks or other materials belonging to
FHKC without FHKC’s consent that shall not be unreasonably withheld.
	 
	 	 	AMERIGROUP shall be responsible for all preparation, cost and
distribution of member handbooks, plan documents, materials, and
orientation, for FHKC participants. Materials will be appropriate to
the population served and unique to the program. All membership
materials and documents that are distributed to FHKC participants
must be reviewed and approved by FHKC prior to distribution.
	 
	 	 	AMERIGROUP agrees to provide FHKC with a copy of all such documents
on an annual basis for review.
	 
	V.	 	Section 3-6 is amended to read:
	 
	 	 	 

			
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Exhibit 10.28.2

	 	 	3-6     Eligibility
	 
	 	 	AMERIGROUP agrees to accept those participants that FHKC has
determined meet the program’s eligibility requirements. AMERIGROUP
reserves the right to request that FHKC review the eligibility of a
particular enrollee. FHKC shall ensure all records and findings
concerning a particular eligibility determination will be made
available with reasonable promptness to the extent permitted
under section 624.91, Florida Statutes and section 409.821, Florida
Statutes, regarding confidentiality of information held by FHKC and
the Florida KidCare Program. AMERIGROUP agrees that the FHKC is the
sole determiner of whether or not a child is eligible for the FHKC
program.

VI. Section 3-15, subsection A is amended to read:

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	3-15	 	Notification
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	A.	 	AMERIGROUP shall immediately notify FHKC in writing of:
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	

	 	 	 	 	1.	 	 	Any judgment, decree, or order
rendered by any court of any jurisdiction or Florida
Administrative Agency enjoining AMERIGROUP from the
sale or provision of service under Chapter 641, Part
II, Florida Statutes.	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	

	 	 	 	 	2.	 	 	Any petition by AMERIGROUP in
bankruptcy or for approval of a plan of reorganization
or arrangement under the Bankruptcy Act or Chapter
631, Part I, Florida Statutes, or an admission seeking
the relief provided therein.	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	

	 	 	 	 	3.	 	 	Any petition or order of
rehabilitation or liquidation as provided in
Chapters 631 or 641, Florida Statutes.	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	

	 	 	 	 	4.	 	 	Any order revoking the
Certificate of Authority granted to AMERIGROUP.	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	

	 	 	 	 	5.	 	 	Any administrative action
taken by the Department of Financial Services or
Agency for Health Care Administration in regard
to AMERIGROUP.	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	

	 	 	 	 	6.	 	 	Any medical malpractice action
filed in a court of law in which a FHKC participant
is a party (or in whose behalf a participant’s
allegations are to be litigated).	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	

	 	 	 	 	7.	 	 	The filing of an application for
change of ownership with the Florida Department of
Financial Services.	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 

			
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	 	8.	 	Any change in subcontractors who are
providing services to FHKC participants.
	 
	 	9.	 	Any pending litigation or
commencement of legal action involving the AMERIGROUP
in which liability for or the AMERIGROUP’S obligation
to pay could exceed $500,000 or 10% of the
AMERIGROUP’S surplus.

	VII.	 	Section 3-18, subsection D is amended to read:

3-18 Conditions of Services Services shall be provided by

	 	 	AMERIGROUP under the following conditions:

	 	D.	 	Emergency Services. Exceptions to Section 3-18
A, B and C are services which are needed immediately for
treatment of an injury or sudden illness where delay means risk
of permanent damage to the participant’s health. AMERIGROUP
shall provide and pay for emergency services both inside and
outside the service area.

	VIII.	 	Section 3-22 is amended to read:

     3-22     Audits

	 	 	3-22-1 Accessibility of Records

AMERIGROUP shall maintain books, records, documents, and other evidence
pertaining to the administrative costs and expenses of the Agreement relating
to the individual participants for the purposes of audit requirements. These
records, books, documents, etc., shall be available for review by authorized
federal, state and FHKC personnel during the Agreement period and five (5)
years thereafter, except if an audit is in progress or audit findings are yet
unresolved in which case records shall be kept until all tasks are completed.
During the contract period these records shall be available at AMERIGROUP’S
offices at all reasonable times. After the contract period and for five years
following, the records shall be available at AMERIGROUP’S chosen location
subject to the approval of FHKC. If the records need to be sent to FHKC,
AMERIGROUP shall bear the expense of delivery. Prior approval of the
disposition of AMERIGROUP and subcontractor records must be requested and
approved if the contract or subcontract is continuous.

This agreement is subject to unilateral cancellation by FHKC if
AMERIGROUP refuses to allow such public access.

 

			
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Exhibit 10.28.2

	 	 	 	 	 
	 

	 	3-22-2
	 	Financial Audit
	 
	 	 	 	 
	

	 	 	 	Upon reasonable notice by FHKC, AMERIGROUP shall permit an
independent audit by FHKC of its financial condition or
performance standard in accordance with the provisions of
this agreement and the Florida Insurance Code and
regulations adopted thereunder.
	 
	 	 	 	 
	

	 	 	 	Additionally, AMERIGROUP agrees to annually provide an
audited financial statement to FHKC by July 1 of each year
for the preceding fiscal year.
	 
	 	 	 	 
	

	 	3-22-3
	 	Post-Contract Audit
	 
	 	 	 	 
	

	 	 	 	AMERIGROUP agrees to cooperate with the post-contract audit
requirements of appropriate regulatory authorities and in
the interim will forward promptly AMERIGROUP’S annually
audited financial statements to the FHKC by the deadline
stated in section 3-22-2.
	 
	 	 	 	 
	

	 	 	 	In addition, AMERIGROUP agrees to the following:
	 
	 	 	 	 
	

	 	 	 	AMERIGROUP agrees to retain and make available upon
request, all books, documents and records necessary to
verify the nature and extent of the costs of the services
provided under this Agreement, and that such records will
be retained and held available by AMERIGROUP for such
inspection until the expiration of four (4) years after
the services are furnished under this Agreement. If,
pursuant to this Agreement and if AMERIGROUP’S duties and
obligations are to be carried out by an individual or
entity subcontracting with AMERIGROUP and that
subcontractor is, to a significant extent, owns or is
owned by or has control of or is controlled by AMERIGROUP,
each subcontractor shall itself be subject to the access
requirement and AMERIGROUP hereby agrees to require such
subcontractors to meet the access requirement.
	 
	 	 	 	 
	

	 	 	 	AMERIGROUP understands that any request for access must be
in writing and contain reasonable identification of the
documents, along with a statement as to the reason that the
appropriateness of the costs or value of the services in
question cannot be adequately or efficiently determined
without access to its books or records. AMERIGROUP agrees
that it will notify FHKC in writing within ten (10) days
upon receipt of a request for access.
	 
	 	 	 	 

			
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Exhibit 10.28.2

	VII.	 	Section 3-24 is amended to read:
	 
	 	 	3-24 Confidentiality of Information
	 
	 	 	AMERIGROUP shall treat all information, and in particular information
relating to participants that is obtained by or through its
performance under the Agreement, as confidential information to the
extent confidential treatment is provided under state and federal
laws. AMERIGROUP shall not use any information so obtained in any
manner except as necessary for the proper discharge of its obligations
and securement of its rights under the Agreement.
	 
	 	 	All information as to personal facts and circumstances concerning
participants obtained by AMERIGROUP shall be treated as privileged
communications, shall be held confidential, and shall not be divulged
without the written consent of FHKC, the participant’s parent or
guardian or the participant, provided that nothing stated herein shall
prohibit the disclosure of information in summary, statistical, or
other form which does not identify particular individuals. The use or
disclosure of information concerning participants will be limited to
purposes directly connected with the administration of the Agreement.
It is expressly understood that substantial evidence of AMERIGROUP’S
refusal to comply with this provision shall constitute a breach of
contract.
	 
	VIII.	 	Exhibit A is amended as attached and incorporated herein.
	 
	IX.	 	Exhibit B, Paragraph 7 is amended to read:

	7.	 	In accordance with state law, a minimum waiting period of
sixty days will be imposed on those participants who voluntarily
cancel their coverage by non-payment of the required monthly
premium. Cancelled participants must request reinstatement from FHKC
and wait at least sixty days from the date of that request before
coverage can be reinstated.

	X.	 	Exhibit E is hereby amended as attached and incorporated herein.
	 
	XI.	 	Exhibit F is hereby amended as attached.
	 
	XII.	 	This amendment shall be effective October 1, 2004.

All provisions in the contract and any attachments thereto in
conflict with this amendment shall be and are hereby changed to
conform with this amendment.

All provisions not in conflict with this amendment are still in effect
and are to be performed at the level specified in the contract. This
amendment and all of its attachments are hereby made a part of this
contract.

			
	Amendment #1
	 	Effective Date: October 1, 2004

 

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Exhibit 10.28.2

IN WITNESS WHEREOF, the parties hereto have caused this 12 page amendment to
be executed by their officials thereunto duly authorized.

FOR AMERIGROUP Florida, Inc.:

	 	 	 
	
 

	 	
 
	Witness

	 	Name:
	

	 	Title:

FOR THE FLORIDA HEALTHY KIDS CORPORATION

	 	 	 
	
 

	 	
 
	Witness

	 	Name:
	

	 	Title:

 

			
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Exhibit 10.28.2

EXHIBIT A

HEALTH SERVICES AGREEMENT

	I.	 	Premium Rate
	 
	 	 	The Comprehensive Health Care Services premium for participants in
the Florida Healthy Kids Health Insurance Program for the coverage
period October 1, 2004 through September 30, 2005 shall be:

	 	 	 
	Broward County:

	 	$83.47 per member per month
	Miami-Dade County:

	 	$83.47 per member per month
	Hillsborough County:

	 	$69.15 per member per month
	Orange County:

	 	$70.64 per member per month
	Palm Beach County:

	 	$83.47 per member per month
	Pasco County:

	 	$62.23 per member per month
	Polk County:

	 	$62.23 per member per month
	Pinellas County:

	 	$69.15 per member per month

	II.	 	Additional Requirements for Premium Rates
	 
	 	 	The rate listed in Paragraph I of this Exhibit also incorporates
the following requirements:

	A.	 	Minimum Medical Loss Ratio The
minimum medical loss ratio shall be 85 percent.
	 
	B.	 	Maximum Administrative Component The
maximum administrative cost for the premium listed in
Section I of this Exhibit shall not exceed 15 percent.

			
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Exhibit 10.28.2

EXHIBIT E

ACCESS and CREDENTIALING STANDARDS

AMERIGROUP shall maintain a medical staff, under contract, sufficient to
permit reasonably prompt medical service to all participants in accordance
with the following:

	1.	 	Physician and Facility Standards

	A.	 	Physician and Medical Provider Standards

	 	 	AMERIGROUP’ S primary care provider network shall include only
board certified pediatricians and family practice physicians or
physician extenders working under the direct supervision of a board
certified practitioner to serve as primary care physicians in its
provider network for County.
	 
	 	 	All Primary care physicians must provide covered
immunizations to enrollees.
	 
	 	 	The AMERIGROUP may request that an individual provider be granted
an exception to this policy by making such a request in writing to
the Corporation and providing the provider’s curriculum vitae and a
reason why the provider should be granted an exception to the
accepted standard. Such requests will be reviewed by the
Corporation on a case by case basis and a written response will be
made to AMERIGROUP on the outcome of the request.

	B.	 	Facility Standards

	 	 	Facilities used for participants shall meet applicable
accreditation and licensure requirements and meet facility
regulations specified by the Agency for Health Care
Administration.

	2.	 	Geographical Access:

	A.	 	Primary Care Providers

	 	 	Geographical access to board certified family practice
physicians, pediatric physicians, primary care dental providers
or ARNP’s, experienced in child health care, of approximately
twenty (20) minutes driving time from residence to provider,
except that this driving time limitation shall be reasonably
extended in those areas where such limitation with respect to
rural residence is unreasonable. In such instance, AMERIGROUP
shall provide access for urgent care through
	 
	 	 	 

			
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Exhibit 10.28.2

	 	 	contracts with nearest providers.

	B.	 	Specialty Physician Services

	 	 	Specialty physician services, ancillary services and specialty
hospital services are to be available within sixty (60) minutes
driving time from the participant’s residence to provider. Driving
time standards may be waived with sufficient justification if
specialty care services are not obtainable due to a limitation of
providers, such as in rural areas.
	 
	3.	 	Timely Treatment
	 
	 	 	Timely treatment by providers, such that the participant shall be
seen by a provider in accordance with the following:

	A.	 	Emergency care shall be provided immediately;
	 
	B.	 	Urgently needed care shall be provided within
twenty-four (24) hours;
	 
	C.	 	Routine care of patients who do not require
emergency or urgently needed care shall be provided within
seven (7) calendar days;
	 
	D.	 	Routine physical examinations shall be
provided within four (4) weeks of enrollee’s request; and,
	 
	E.	 	Follow-up care shall be provided as medically appropriate.

	 	 	For the purposes of this section, the following definitions shall
apply:
	 
	 	 	Emergency care is that required for the treatment of an injury or
acute illness that, if not treated immediately, could reasonably
result in serious or permanent damage to the patient’s health.
	 
	 	 	Urgently needed care is that required within a twenty-four
(24) hour period to prevent a condition from requiring
emergency care.
	 
	 	 	Routine care is that level of care that can be delayed without
anticipated deterioration in the patient’s medical condition for
a period of seven (7) calendar days.

By utilization of the foregoing standards, FHKC does not intend to create
standards of care or access different from those that are deemed acceptable
within the AMERIGROUP service area. Rather FHKC intends that the provider
timely and appropriately respond to patient care needs, as they are presented,
in accordance with standards of care existing within the service area. In
applying the foregoing standards, the provider shall give due regard to the
level of discomfort and anxiety of the patient and/or parent.

 

			
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Exhibit 10.28.2

In the event FHKC determines that AMERIGROUP, or its providers, has failed to
meet the access standards herein set forth, FHKC shall provide AMERIGROUP
with written notice of non-compliance. Such notice can be provided via
facsimile or other means, specifying the failure in such detail as will
reasonably allow AMERIGROUP to investigate and respond. Failure of AMERIGROUP
to obtain reasonable compliance or acceptable community care under the
following conditions shall constitute a breach of this agreement:

	A.	 	immediately upon receipt of notice for emergency or urgent problem; er
	 
	B.	 	within ten (10) days of receipt of notice for routine visit access;

Such breach shall entitle FHKC to such legal and equitable relief as may be
appropriate. In particular, FHKC may direct its participants to obtain such
services outside the AMERIGROUP provider network as specified in Section
3-2-1 of this Agreement. AMERIGROUP shall be financially responsible for all
services under this provision.

 

			
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Exhibit 10.28.2

EXHIBIT F

ELIGIBILITY STANDARDS

Participant Eligibility Criteria

The following eligibility criteria for participation in the Healthy Kids
Program must be met:

	1.	 	The participants must be children who are age 5 through 18.
Participants who applied for coverage prior to July 1, 1998 and who had
attained the age of 19 by March 31, 2004 are eligible for coverage
through their 19th birthday.
	 
	 	 	In accordance with the terms of the Request for Proposals dated
March 2003 and April 2004, some children may have age eligibility
from age 18 months through age 4 depending on their county of
residence.
	 
	2.	 	Participants must meet the eligibility criteria established under
§624.91, Florida Statutes and as implemented by FHKC Board of
Directors.
	 
	3.	 	Eligible participants may enroll during time periods established by FHKC
Board of Directors and in accordance with §624.91, Florida Statutes.
	 
	4.	 	Determination of eligibility for the Healthy Kids program is made
solely by the Florida Healthy Kids Corporation.

      

			
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Exhibit 10.42.1

HHSC Contract No. 529-04-296-A

STATE OF TEXAS

COUNTY OF TRAVIS

AMENDMENT 1

TO THE AGREEMENT BETWEEN THE

HEALTH & HUMAN SERVICES COMMISSION

AND

AMERIGROUP TEXAS, INC.

FOR HEALTH SERVICES

TO THE

MEDICAID STAR PROGRAM

IN THE

TRAVIS SERVICE DELIVERY AREA

     THIS CONTRACT AMENDMENT (the “Amendment”) is entered into between the
HEALTH & HUMAN SERVICES COMMISSION (“HHSC”), an administrative agency within
the executive department of the State of Texas, and AMERIGROUP TEXAS, INC.
(“HMO”), a health maintenance organization organized under the laws of the
State of Texas, possessing a certificate of authority issued by the Texas
Department of Insurance to operate as a health maintenance organization, and
having its principal office at 1200 E. Copeland Rd. Suite 200, Arlington, TX
76011. HHSC and CONTRACTOR may be referred to within this Amendment
individually as a “Party” and collectively as the “Parties.”

     The Parties hereby agree to amend their Agreement as set forth herein.

ARTICLE 1. PURPOSE.

Section 1.01 Authorization.

     This Amendment is executed by the Parties in accordance with
Article 15.2 of the Agreement.

Section 1.02 Effective Date.

     Except as specific below, the Effective Date of this Agreement is
September 1, 2004. Upon execution by the parties, the term of this agreement is
extended through August 31, 2005, unless extended or terminated sooner by HHSC,
in accordance with this Agreement.

ARTICLE 2. AMENDMENT TO THE OBLIGATIONS OF THE PARTIES

Section 2.01 Modification to Article 4, Fiscal, Financial, Claims and Insurance Requirements

Article 4, Fiscal, Financial, Claims and Insurance Requirements,
is amended by modifying Section 4.6 as follows:

4.6.3 HMO understands that acceptance of funds under
this Contract acts as acceptance of the authority of
the State Auditor’s Office (“SAO”), or any successor
agency, to conduct an investigation in connection
with those funds. HMO further agrees to cooperate
fully with the SAO or its successor in the conduct
of the audit or investigation, including providing
all records requested. HMO will ensure that this
clause concerning the authority to audit funds
received indirectly by subcontractors through
CONTRACTOR and the requirement to cooperate is
included in any subcontract it awards

					
	 	 	 	 	 
	HHSC Contract No. 529-04-296-A
	 	Page 1 of 8
	 	Effective Date: September 1, 2004

 

 

Exhibit 10.42.1

Section 2.02 Modification to Article5, Compliance with State and Federal Laws

Article 5, Compliance with State and Federal Laws, is
amended by modifying Section 5.3, as follows:

     5.3 FRAUD AND ABUSE COMPLIANCE PLAN

     5.3.1 This contract is subject to all state and
federal laws and regulations relating to fraud and
abuse in health care and the Medicaid program. HMO
must cooperate and assist HHSC and any other state or
federal agency charged with the duty of identifying,
investigating, sanctioning or prosecuting suspected
fraud and abuse. HMO must provide originals and/or
copies of all records and information requested and
allow access to premises and provide records to HHSC
or its authorized agent(s), HHSC, CMS, the U.S.
Department of Health and Human Services, FBI, TDI,
and the Texas Attorney General’s Medicaid Fraud
Control Unit. All copies of records must be provided
free of charge.

     5.3.2 Compliance Plan. HMO must submit to HHSC
Office of Inspector General (HHSC-OIG) for approval a
written fraud and abuse compliance plan which is
based on the Model Compliance Plan issued by the U.S.
Department of Health and Human Services, the Office
of Inspector General (OIG), no later than 30 days
after the effective date of the contract. HMO must
designate an officer or director in its organization
who has the responsibility and authority for carrying
out the provisions of its compliance plan. HMO must
submit any updates or modifications in its compliance
plan to HHSC-OIG for approval at least 30 days prior
to the modifications going into effect. HMO’s fraud
and abuse compliance plan must:

     5.3.2.1 ensure that all officers, directors,
managers and employees know and understand the
provisions of HMO’s fraud and abuse compliance plan.

     5.3.2.2 contain procedures designed to prevent
and detect potential or suspected abuse and fraud in
the administration and delivery of services under
this contract.

     5.3.2.3 contain provisions for the confidential
reporting of plan violations to the designated person
in HMO.

     5.3.2.4 contain provisions for the investigation
and follow-up of any compliance plan reports.

     5.3.2.5 ensure that the identity of individuals
reporting violations of the plan is protected.

     5.3.2.6 contain specific and detailed internal
procedures for officers, directors, managers and
employees for detecting, reporting, and investigating
fraud and abuse compliance plan violations.

     5.3.2.7 require any confirmed or suspected fraud
and abuse under state or federal law be reported to
HHSC, the Medicaid Provider

					
	 	 	 	 	 
	HHSC Contract No. 529-04-296-A
	 	Page 2 of 8
	 	Effective Date: September 1, 2004

 

 

Exhibit 10.42.1

Integrity section of the Office of Inspector General
of the Texas Health and Human Services Commission,
and/or the Medicaid Fraud Control Unit of the Texas
Attorney General.

     5.3.2.8 ensure that no individual who reports
plan violations or suspected fraud and abuse is
retaliated against.

     5.3.3 Training. HMO must designate executive and
essential personnel to attend mandatory training in
fraud and abuse detection, prevention and reporting.
The training will be conducted by the Office of
Inspector General, HHSC, and will be provided free of
charge. HMO must schedule and complete training no
later than 90 days after the effective date of any
updates or modification of the written Model
Compliance Plan.

     5.3.3.1 If HMO’s personnel have attended OIG
training prior to the effective date of this
contract, they are not required to attend additional
OIG training unless new training is required due to
changes in federal and/or state law or regulations.
If additional OIG training is required, HHSC will
notify HMO to schedule this additional training.

     5.3.3.2 If HMO updates or modifies its written
fraud and abuse compliance plan, HMO must train its
executive and essential personnel on these updates or
modifications no later than 90 days after the
effective date of the updates or modifications.

     5.3.3.3 If HMO’s executive and essential
personnel change or if HMO employs additional
executive and essential personnel, the new or
additional personnel must attend OIG training within
90 days of employment by HMO.

     5.3.4 HMO’s failure to report potential or
suspected fraud or abuse may result in sanctions,
contract cancellation, or exclusion from
participation in the Medicaid program.

     5.3.5 HMO must allow the Texas Medicaid Fraud
Control Unit and HHSC’s Office of Inspector General,
to conduct private interviews of HMO’s employees,
subcontractors and their employees, witnesses, and
patients. Requests for information must be complied
with in the form and the language requested. HMO’s
employees and its subcontractors and their employees
must cooperate fully and be available in person for
interviews, consultation, grand jury proceedings,
pre-trial conference, hearings, trial and in any
other process.

     5.3.6 Subcontractors. HMO must submit the
documentation described in Articles 5.3.6.1 through
5.3.6.3, in compliance with Texas Government Code
‘533.012, regarding any subcontractor providing
health care services under this contract except for
those providers who have re-enrolled as a provider in
the Medicaid program as required by Section 2.07,
Chapter 1153, Acts of the 75th Legislature, Regular
Session, 1997, or who modified a contract in
compliance with that section. HMO must submit
information in a format as specified by HHSC.
Documentation must be submitted no later than 120
days after the effective date of this contract.
Subcontracts entered into after the effective date of
this contract must be submitted no later than 90 days
after the effective date of the subcontract. The

					
	 	 	 	 	 
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Exhibit 10.42.1

required documentation required under this provision
is not subject to disclosure under Chapter 552,
Government Code.

     5.3.6.1 a description of any financial or other
business relationship between HMO and its
subcontractor;

     5.3.6.2 a copy of each type of contract between
HMO and its subcontractor;

     5.3.6.3 a description of the fraud control
program used by any subcontractor. Per HHSC request,
and on an ad-hoc basis, HMOs will be required to
submit a list of Health-related Materials currently
being used, or used previously; HHSC may request the
review of selected materials from that list. HHSC
will provide HMO a reasonable amount of time to
respond to such requests, generally no less than 10
business days.

     5.3.7 Special Investigations Unit. An HMO that
provides or arranges for the provision of health care
services to an individual under the Medical
Assistance Program (Medicaid), must arrange for a
special investigative unit to investigate fraudulent
claims and other types of program abuse by recipients
and providers. An HMO may choose to:

     (1) Establish and maintain the special
investigative unit within the managed care
organization; or

     (2) Contract with another entity for the investigation.

     5.3.7.1 An HMO must develop a plan to prevent
and reduce waste, abuse, and fraud. The plan must
meet the requirements of the rules established by
HHSC and be submitted annually to the HHSCOIG for
approval each year the HMO is enrolled with the State
of Texas. The plan must be submitted 60 days prior to
the start of the State fiscal year.

     5.3.7.1.1 If the initial plan to prevent and
reduce waste, abuse, and fraud is not approved, the
HMO must resubmit the plan to HHSCOIG within 15
working days of receiving the denial letter, which
will explain the deficiencies. If the plan is not
resubmitted within the time allotted, the HMO will be
in default and sanctions may be imposed.

     5.3.7.2 If the HMO elects to contract with
another entity for the investigation of fraudulent
claims and other types of program abuse as referenced
in paragraph (b)(2) of this section, the HMO must
adhere to all requirements of Chapter 42, § 438.230
of the Code of Federal Regulations.

     Section 2.03 Modification to Article 6, Scope of Services

Article 6, Scope of Services, is amended by modifying
Section 6.1.6.2, as follows:

     6.1.6.2 Value-added services can only be added
or removed by written amendment of this contract one
time per fiscal year. HMO

					
	 	 	 	 	 
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Exhibit 10.42.1

cannot include a value-added service in any material
distributed to Members or prospective Members until
this contract has been amended to include that
value-added service or HMO has received written
approval from HHSC pending finalization of the
contract amendment.

Section 2.04 Modification to Article7, Provider Network Requirements

Article 7, Provider Network Requirements, is amended by
mod5ing Section 7.6, as follows:

     7.6 PROVIDER COMPLAINT AND APPEAL PROCEDURES

     7.6.1 HMO must develop, implement and maintain
a provider complaint system. The complaint and
appeal procedures must be in compliance with all
applicable state and federal law or regulations. All
Member complaints and/or appeals of an adverse
determination requested by the enrollee, or any
person acting on behalf of the enrollee, or a
physician or provider acting on behalf of the
enrollee must comply with the provisions of this
Article. Modifications and amendments to the
complaint system must be submitted to HHSC no later
than 30 days prior to the implementation of the
modification or amendment.

     7.6.2 HMO must include the provider complaint
and appeal procedure in all network provider
contracts or in the provider manual.

     7.6.3 HMO’s complaint and appeal process cannot
contain provisions requiring a provider to submit a
complaint or appeal to HHSC for resolution in lieu
of the HMO’s process.

     7.6.4 HMO must establish mechanisms to ensure
that network providers have access to a person who
can assist providers in resolving issues relating to
claims payment, plan administration, education and
training, and complaint procedures.

     7.6.5 Beginning August 1, 2004, providers must
file appeals or adjustment requests within 120 days
from the date of disposition, which is the date of
the Remittance and Status (R&S) report on which the
last action on the claims appears; the deadline is
applicable to both paper and electronic submissions.

     7.6.6 Fiscal Agent Payment Deadlines. The
state’s Claims Administrator must finalize all
claims, including appeals, within 24 months; the
24-month deadline is a payment deadline, and is not
the claims filing deadline that is in place for
claims submissions and appeals. Please refer to
Texas Medicaid Bulletin, No. 178, March/ April 2004
edition, “Fiscal Agent Payment Deadlines” for more
specific information regarding payment deadlines.

					
	 	 	 	 	 
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Exhibit 10.42.1

Section 2.05 Modification of Article 13, Payment Provisions

Article 13, Payment Provisions, is amended by modifying
Section 13.1.1, as follows:

     13.1.1 HHSC will reimburse HMO based on a fixed
monthly Capitation Rate for each enrolled Member.
Capitation Rates for each HMO may vary by Service
Area and HMO. HHSC and/or contracted actuaries will
perform data analysis and calculate the Capitation
Rates for each Rate Period.

     The monthly Capitation Rate will consist of the
following components:

     1. cost to cover the health care services

     2. cost of administering the program; and

     3. allowance for risk.

Section 2.06 Modification of Article 13, Payment Provisions

Article 13, Payment Provisions, is amended by modifying
Section 13.1.2, as follows:

     13.1.2 The monthly capitation amounts and the
Delivery Supplemental Payment (DSP) amount, effective
as of September 1, 2004, are listed below.

	 	 	 	 	 
	SDA	 	Monthly
	Risk Group
	 	Capitation Amounts

	TANF Children (> 1 year of age)
	 	$	72.41	 
	TANF Children (< 1 year of age)
	 	$	218.95	 
	TANF Adults
	 	$	180.14	 
	Pregnant Women
	 	$	297.18	 
	Newborns (up to 12 Months of Age)
	 	$	542.73	 
	Expansion Children. (> 1 year of Age)
	 	$	83.81	 
	Expansion Children. (< 1 year of Age)
	 	$	172.47	 
	Federal Mandate Children
	 	$	62.66	 
	Disabled/Blind Administration
	 	$	14.00	 

     Delivery Supplemental Payment. A one-time per
pregnancy supplemental payment for each delivery
shall be paid to HMO as provided below in the
following amount: $3,147.49.

Section 2.07 Modification of Article 19, Term

Article 19, Term, is amended by modifying Section 19, as follows:

					
	 	 	 	 	 
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Exhibit 10.42.1

     19.1 The effective date of this contract is June
1, 2004. The contract will terminate on August 31,
2005, unless extended or terminated earlier as
provided for elsewhere in this contract.

					
	 	 	 	 	 
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Exhibit 10.42.1

ARTICLE 3. REPRESENTATIONS AND AGREEMENT OF THE PARTIES

     The Parties contract and agree that the terms of the Agreement will remain
in effect and continue to govern except to the extent modified in this
Amendment.

     By signing this Amendment, the Parties expressly understand and agree that
this Amendment is hereby made a part of the Agreement as though it were set out
word for word in the Agreement.

     IN WITNESS HEREOF, HHSC and the CONTRACTOR have each caused this Amendment
to be signed and delivered by its duly authorized representative.

	 	 	 	 	 	 	 
	 	 	          AMERIGROUP TEXAS, INC.	 	     HEALTH & HUMAN SERVICES COMMISSION
	 
	 	 	 	 	 	 
	By:

	 	/s/ Eric M. Yoder
	 	By:	 	 
	

	 	
 
	 	 	 	
 
	

	 	Eric Yoder
	 	 	 	Albert Hawkins
	

	 	President and CEO
	 	 	 	Executive Commissioner
	 
	 	 	 	 	 	 
	Date: 7/23/04	 	Date:                                         

					
	 	 	 	 	 
	HHSC Contract No. 529-04-296-A
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