Document:

Exhibit 10.133

 

FIRST
AMENDMENT TO

PACIFICARE
OF CALIFORNIA

MEDICAL
GROUP/IPA SERVICES AGREEMENT

(PROFESSIONAL
CAPITATION)

 

This First Amendment to the PacifiCare Medical Group/IPA Services
Agreement (the “Amendment”) is effective January 1, 2002 by and between
PacifiCare of California, a California corporation (“PacifiCare”), and Prospect
Medical Group (“Medical Group”), with respect to the following facts:

 

RECITALS

 

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

 

B.                                     The parties desire
to amend the terms of the Agreement in the manner set forth herein.

 

NOW, THEREFORE, in consideration of the
foregoing, the parties hereto agree as follows:

 

1.                                       INCENTIVE
PROGRAMS.  Section 5.4.1,
Incentive Program Withhold, of the Agreement shall be deleted and replaced with
the following language.

 

5.4.1 Incentive Program Withhold.  PacifiCare shall establish a single withhold
from Medical Group’s monthly Capitation Payment for purposes of offsetting
potential deficits for the combined incentive programs.  The monthly incentive withhold shall
initially be *** per Member per month for the PacifiCare Commercial Health Plan
and Twenty Five Dollars ($25.00) per Member per month for the Secure Horizons
Health Plan.  The Incentive Program
Withhold shall not exceed *** per Member per month for the PacifiCare
Commercial Health Plan and *** per Member per month for the Secure Horizons
Health Plan.  Should the Incentive
Program Withhold exceed the Incentive Program Deficits, PacifiCare shall
prospectively adjust the withhold on a quarterly basis, based on Medical
Group’s experience under the combined incentive programs at the time of the
program settlements described below. 
Medical Group’s Incentive Program Withhold limits, as referenced above,
are based upon a calendar year.  To the
extent that Incentive Program Withhold amounts are decreased through the
quarterly settlement process, these amounts may be subsequently increased above
the stated withhold limits, provided that the average per member per month
Incentive Program Withhold for the calendar year does not exceed the stated
withhold limits.

 

2.                                       INCENTIVE
PROGRAMS.  Section 5.4.2,
Incentive Program Settlements, of the Agreement shall be deleted and replaced
with the following language.

 

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

 

1

 

PacifiCare shall conduct combined settlements on a quarterly basis,
inclusive of a reserve allowance for incurred but not reported claims expense,
for all of the incentive programs for Managed Care Plans applicable to Medical
Group.  Surpluses and deficits under
each of the incentive programs shall be aggregated and offset against one
another, Payments shall be made to the Medical Group within seventy five (75)
days after the end of each calendar quarter. 
Should the withhold amount exceed that of the deficits in the Incentive
Program, PacifiCare will adjust the withhold amount to support the applicable
deficit in the Incentive Program.

 

PacifiCare will conduct a final calculation annually (the “Final
Calculation”) based on the contract calendar year.  The incentive program withhold described above shall be refunded
to the Medical Group at the time of the incentive program settlements, except
that Medical Group’s share of any incentive program deficits shall be deducted
from such refund.  Payments under the
combined incentive programs will be due from the owing party within one hundred
and 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.

 

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

 

3.                                       PRODUCT
ATTACHMENT A, PACIFICARE COMMERCIAL HEALTH PLAN shall be deleted in its
entirety from the Agreement and replaced with the attached PRODUCT ATTACHMENT
A.

 

4.                                       PRODUCT
ATTACHMENT B, PACIFICARE COMMERCIAL POTNT-OF-SERVICE PLAN shall be deleted
in its entirety from the Agreement and replaced with the attached PRODUCT
ATTACHMENT B.

 

2

 

5.                                       PRODUCT
ATTACHMENT C, SECURE HORIZONS HEALTH PLAN shall be deleted in its entirety
from the Agreement and replaced with the attached PRODUCT ATTACHMENT C.

 

6.                                       DIVISION
OF FINANCIAL RESPONSIBILITY shall be deleted in its entirety from the
Agreement and replaced with the attached DIVISION OF FINANCIAL RESPONSIBILITY.

 

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

 

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

 

9.                                       Representations
and Warranties.  The parties to this
Agreement represent and warrant that they have read the Agreement and this
Amendment in their entirety; that they fully understand their rights and
obligations under this Agreement; that they have executed this Agreement freely
and voluntarily; that the Agreement, as amended, constitutes the entire
understanding and agreement between the parties.  The parties hereto further represent and warrant that they have
had the time and opportunity to consult with attorneys and financial advisors
of their choice in connection with the negotiation of this Amendment and the
parties’ decision to enter into this Amendment.  Neither party has relied upon the other party to determine the
reasonableness or enforceability of the terms of this Amendment.

 

IN WITNESS WHEREOF, the undersigned parties
hereby agree to this Amendment as of the dates set forth below.

 

 

	
   

  	
  PACIFICARE OF CALIFORNIA,

  A California corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Brian Jeffrey

  	
   

  
	
   

  	
  Name:

  	
  Brian Jeffrey

  
	
   

  	
  Title:

  	
  Vice President, Network Management

  
	
   

  	
  Date:

  	
  12/7/??

  	
   

  
							

 

3

 

	
   

  	
  PROSPECT MEDICAL GROUP

  A California professional corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Peter G. Goll

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Peter
  G. Goll

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  Senior
  Vice President

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
  12-5-01

  	
   

  
							

 

4

 

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 l

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                                 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.

 

1.2                                 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, Premium taxes and premiums for Supplemental Benefits.

 

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

 

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

 

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

 

ARTICLE 2

DUTIES OF
MEDICAL GROUP

 

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

 

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

 

5

 

provisions of the OPM Agreement, which are
applicable to Medical Group’s Participating Providers are included in Medical
Group’s subcontracts with its Participating Providers.  A copy of the OPM Agreement shall be
provided to Medical Group concurrent with the execution of this Agreement.

 

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

 

ARTICLE 3

COMPENSATION

 

3.1                                 Age/Gender/Benefit
Adjusted Commercial Capitation. 
Capitation Payments to Medical Group 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 shall be *** per Commercial Plan Member per month for
Prospect North (PacifiCare DEC# 3948). 
The Base Capitation Rate shall be *** per Commercial Plan Member per
month for Prospect Central (PacifiCare DEC# 11276).  The Base Capitation Rate shall be *** per Commercial Plan Member
per month for Prospect South (PacifiCare DEC# 11277).  The Base Capitation Rate shall be *** per Commercial Plan Member
per month for Nuestra Familia Medical Group (PacifiCare DEC# 11315).  For the month of January 2002, the base
capitation using the November 2001 membership demographics, shall yield
*** per member per month.  Age/gender
adjustment factors are actuarially determined and are listed below.  Benefit adjustment factors are actuarially
determined and may take into consideration variations in benefit plan types,
copay 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 average capitation rate 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:

 

	
  Child 0

  	
   

  	
  1.9939

  
	
  Child 1

  	
   

  	
  1.2664

  
	
  Child 2 - 9

  	
   

  	
  0.4730

  
	
  Child 10 - 17

  	
   

  	
  0.4375

  
	
  Female 18 - 19

  	
   

  	
  0.7395

  
	
  Female
  20 - 24

  	
   

  	
  1.4564

  

 

6

 

	
  Female 25 - 29

  	
   

  	
  1.6593

  
	
  Female 30 - 34

  	
   

  	
  1.4785

  
	
  Female 35 - 39

  	
   

  	
  1.2495

  
	
  Female 40 - 44

  	
   

  	
  1.3095

  
	
  Female 45 - 49

  	
   

  	
  1.2221

  
	
  Female 50 - 54

  	
   

  	
  1.5869

  
	
  Female 55 - 59

  	
   

  	
  1.7404

  
	
  Female 60 - 64

  	
   

  	
  2.0135

  
	
  Female 65 plus

  	
   

  	
  2.0630

  
	
  Male 18 - 19

  	
   

  	
  0.3554

  
	
  Male 20 - 24

  	
   

  	
  0.4774

  
	
  Male 25 - 29

  	
   

  	
  0.5702

  
	
  Male 30 - 34

  	
   

  	
  0.6033

  
	
  Male 35 - 39

  	
   

  	
  0.7038

  
	
  Male
  40 - 44

  	
   

  	
  0.7700

  
	
  Male 45 - 49

  	
   

  	
  0.8742

  
	
  Male 50 - 54

  	
   

  	
  1.3235

  
	
  Male 55 - 59

  	
   

  	
  1.7024

  
	
  Male 60 - 64

  	
   

  	
  2.2284

  
	
  Male 65 plus

  	
   

  	
  2.3563

  

 

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.

 

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

 

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

 

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

 

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

 

7

 

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 zero 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 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
             dollars (            )
per Commercial Plan Member per
calendar year.

 

(ii)                                  Reinsurance
Premium shall be
             dollars (            )
of Commercial Plan Premium.

 

(iii)                               Reinsurance Coinsurance shall be *** of the
Cost of Care for amounts in excess of the Reinsurance Deductible but less than
*** and *** of the Cost of Care for amounts in excess of ***.

 

3.3.2                        CHIP Budget.  The CHIP Budget for
Commercial Plan Members shall be *** flat per Member per month, excluding Commercial POS Plan Members, less
PacifiCare Commercial Plan Reinsurance Premium, if any, and is subject to the
adjustments set forth in Article 5 of the Base

 

8

 

Agreement
and the adjustments further specified below.

 

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

 

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

 

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

 

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

 

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

 

(v)                                 Any and all amounts received from third
parties for Hospital 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, limited to $2.00 per 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 Health Plan Pharmacy Incentive and
Upside Sharing Programs.  PacifiCare shall establish and administer a
Pharmacy Upside Sharing Program for the 2002 calendar year and ongoing for the
PacifiCare Commercial Health Plan (the “PIP”). 
The PIP is designed to provide an incentive for the efficient and
effective use of Outpatient Pharmacy Supplemental Benefits for Commercial
Health Plan Members.  PacifiCare shall
provide Medical Group with monthly reports on the PIP (no later than the
twentieth (20th) calendar day following the applicable month) which shall
include data showing the applicable Member, Participating

 

9

 

Provider and pharmaceutical
prescribed for the applicable Member. 
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 Health Plan Members plus *** per
Commercial Health Plan Member per month, which amount is established as a
credit for rebates received annually from pharmaceutical manufacturers.  This credit may or may not reflect the total
pharmaceutical manufacturer rebate revenues received by PacifiCare.  The PIP Budget shall be retained by
PacifiCare for purposes of administering the PIP.

 

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

 

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

 

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

 

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

 

 

	
   

  	
  PACIFICARE
  OF CALIFORNIA

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Brian Jeffrey

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  Vice
  President

  	
   

  
	
   

  	
   

  
	
   

  	
  Date:

  	
  12/7/01

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  PROSPECT
  MEDICAL GROUP

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Peter G. Goll

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  Senior
  Vice President

  	
   

  
	
   

  	
   

  
	
   

  	
  Date:

  	
  12-5-01

  	
   

  
								

 

10

 

PRODUCT ATTACHMENT B

 

PACIFICARE COMMERCIAL
POINT-OF-SERVICE PLAN

 

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

 

ARTICLE 1

DEFINITIONS

 

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

 

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

 

1.2                                 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                                 ln-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.

 

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

 

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

 

11

 

1.7.1                        In-Network
Premium is the Commercial Plan Premium, as defined in Product Attachment B,
billed or accounted for by PacifiCare for coverage of In-Network Services under
the PacifiCare Commercial POS Plan.

 

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

 

ARTICLE 2

DUTIES OF
MEDICAL GROUP

 

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

 

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

 

ARTICLE 3

COMPENSATION

 

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

 

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

 

3.1.2                        Adjustment
for 1SL Premium.  In calculating
Capitation Payments due to the Medical Group for Commercial POS Plan Members,
PacifiCare shall deduct eighty percent (80%) of the ISL Premium amount set
forth in Section 3.2 of Product Attachment A from the amounts otherwise
due to Medical Group, unless PacifiCare has approved of Medical Group’s opt out
of PacifiCare’s ISL Program.

 

12

 

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

 

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

 

(i)                                     POS
Plan Budget shall equal the CHIP Budget, plus the POS Capitation Withhold,
plus fifty percent (50%) of the Out-of-Network Premium, less PacifiCare POS
Control Program Reinsurance Premium, if any.

 

(ii)                                  POS
Plan Costs shall mean the following:

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

3.2.2                        POS
Control Program Reinsurance.  Unless
PacifiCare has approved of Medical Group’s opt out of POS reinsurance (“POS
Control Program Reinsurance”), PacifiCare

 

13

 

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

 

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

 

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

 

(ii)                                  In-Network
Reinsurance Premium shall be
            
(        ) of the Commercial Plan
Reinsurance Premium amount set forth in Section 3.3.1 of Product
Attachment A.

 

(iii)                               Out-of-Network
Reinsurance Premium shall be
            
(        ) of the Commercial Plan
Reinsurance Premium amount set forth in Section 3.3.1 of Product
Attachment A.

 

If PacifiCare has approved of Medical Group’s
opt out of the Reinsurance Program, the above amounts and percentages will
reflect “zero.”  In such event, Medical
Group shall be required to obtain reinsurance coverage from a third-party
insurance carrier in accordance with Section 5.6.5 of the Base Agreement.

 

3.2.4                        Documentation.  PacifiCare shall provide Medical Group with
a list of In-Network Hospital Services claim payments and Out-of-Network claim
payments in support of computation and accuracy of POS Plan Costs, third party
liability and coordination of benefit recoveries, assumptions and data
supporting the POS Plan Budget, the Budget Surplus, and the Budget Deficit and
the Capitation Restoration Amount.

 

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

 

14

 

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

 

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

 

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

 

 

	
   

  	
  PACIFICARE OF CALIFORNIA

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Brian Jeffrey

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  Vice President

  	
   

  
	
   

  	
   

  
	
   

  	
  Date:

  	
  12/7/01

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  PROSPECT MEDICAL GROUP

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Peter G. Goll

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  Senior Vice President

  	
   

  
	
   

  	
   

  
	
   

  	
  Date:

  	
  12/5/01

  	
   

  
							

 

15

 

PRODUCT ATTACHMENT C

 

SECURE HORIZONS HEALTH PLAN

 

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

 

ARTICLE 1

DEFINITIONS

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

ARTICLE 2

DUTIES OF
MEDICAL GROUP

 

2.1                                 Compliance
with HCFA Agreement and Federal Medicare Law.  Medical Group shall comply with all requirements in the HCFA
Agreement, which are applicable to Medical Group as a subcontractor of
PacifiCare as a result of this Agreement. 
Without limiting the foregoing, Medical Group shall ensure that all provisions
of the HCFA Agreement, which are applicable

 

16

 

to Medical Group’s Participating Providers as
a subcontractor of PacifiCare are included in Medical Group’s subcontracts with
its Participating Providers.  A copy of
the HCFA Agreement shall be made available to Medical Group concurrent with the
execution of this Agreement.  Medical
Group and its Participating Providers shall comply with Title XVIII of the
Social Security Act and the regulations adopted thereunder by HCFA for the
Medicare program.

 

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

 

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

 

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

 

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

 

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

 

(iv)                              PacifiCare’s
policies pertaining to enrollment and assessment of new Secure Horizons Members
including requirements to conduct a health assessment of all new Secure
Horizons Members within ninety (90) days of the effective date of their
enrollment.

 

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

 

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

 

17

 

program.

 

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

 

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

 

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

 

ARTICLE 3

COMPENSATION

 

3.1                                 Capitation
Payments for Secure Horizons Members. 
Capitation Payments for Secure Horizons Members shall be thirty seven
and five tenths percent (37.5%) of the Secure Horizons Revenue per Secure
Horizons Member per month, plus zero dollars and zero cents ($0.00) for each
Secure Horizons Member for whom PacifiCare has received a monthly member
premium, subject to the adjustments set forth in Article 5 of the Base
Agreement and the adjustments set forth below in this Section.

 

3.1.1                        Adjustment
for ISL Premium.  In calculating
Capitation Payments due to Medical Group, PacifiCare shall deduct the ISL
Premium amount set forth herein from the

 

18

 

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 zero
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 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
             
(         ) per Secure Horizons
Member per calendar year.

 

(ii)                                  Reinsurance Premium shall be
             
percent (       %) of the Secure Horizons
Revenue.

 

(iii)                               Reinsurance
Coinsurance shall be *** of the Cost of Care for amounts in excess of the
Reinsurance Deductible but less than *** and *** of the Cost of Care for amounts in excess of ***.

 

3.3.2                        SHIP Budget.  The SHIP Budget for Secure
Horizons Members shall be forty nine percent (49.0%) of the Secure Horizons
Revenue per Secure Horizons Member per Month, subject to the adjustments set
forth in Article 5 of the Base Agreement and further specified below, less
PacifiCare Secure Horizons Plan Reinsurance Premium, if any.

 

19

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

*** to Medical
Group

*** to PacifiCare

 

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

 

*** to Medical
Group,

*** to
PacifiCare

 

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

 

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

 

Dental Benefits

Immunosuppressive Drugs

 

20

 

Outpatient Pharmacy Benefits

Respite Care

 

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

 

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

 

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

 

3.4.3                        MSBP
Surplus.  In the event the MSBP
Expense is less than the MSBP Budget, fifty percent (50%) of the surplus shall
be allocated to Medical Group.

 

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

 

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

 

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

 

21

 

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

 

 

	
   

  	
  PACIFICARE OF CALIFORNIA

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Brian Jeffrey

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  Vice President

  	
   

  
	
   

  	
   

  
	
   

  	
  Date:

  	
  12/7/01

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  PROSPECT MEDICAL GROUP

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Peter G. Goll

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  Senior Vice President

  	
   

  
	
   

  	
   

  
	
   

  	
  Date:

  	
   12-5-01

  	
   

  
								

 

22

 

PACIFICARE OF CALIFORNIA

 

MEDICAL GROUP/IPA SERVICES
AGREEMENT

(PROFESSIONAL CAPITATION)

 

DIVISION OF FINANCIAL
RESPONSIBILITY

 

(This Exhibit is an
integral part of this Agreement)

 

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

 

Division of Financial
Responsibility

 

	
  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 - CO

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

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

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  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.

 

23

 

	
  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

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  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.

 

24

 

	
  Service Description

  	
   

  	
  Medical

  Group

  	
   

  	
  Hospital

  Incentive

  Program

  	
   

  	
  PacifiCare

  
	
  MENTAL
  HEALTH: Secure Horizons and Commercial (non 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 / Denial Services - Accident & Injury Only - OP - Fac

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

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

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  Out
  of Area - IP & OP - Fac

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  Out
  of Area - IP & OP - Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  Outpatient
  Surgery - OP - Fac

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  Outpatient
  Surgery - OP - Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

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

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  Prosthetics
  - Surgical Implants - OP

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  Radiation
  Therapy - IP & OP - Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  Radiation
  Therapy - OP - Fac 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

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  Transplants-
  IP - Fac

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  Transplants
  - IP - Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  Urgent
  Care - OP - Fac & Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  Vision
  Medical Treatment - OP - Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

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

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

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

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

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

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  

 

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

 

25Exhibit 10.134

 

 

SECOND AMENDMENT TO

PACIFICARE OF CALIFORNIA

MEDICAL GROUP/IPA SERVICES AGREEMENT

(PROFESSIONAL CAPITATION)

 

This Second Amendment to the PacifiCare 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 Prospect Medical Group (“Medical Group”), with respect to
the following facts:

 

RECITALS

 

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

 

B.                                     The
parties desire to amend the terms of the Agreement in the manner set forth
herein.

 

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 are 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, which
services may include experimental services. 
For purposes of this Agreement, “medically necessary” shall have the
meaning set forth in the applicable Subscriber Agreement.

 

1.11                           Emergency
Services are Covered Services provided in a hospital emergency facility or
comparable facility to evaluate, treat and stabilize a medical condition of
recent onset and severity, including, without limitation, severe pain that
would lead a prudent layperson, possessing an average knowledge of medicine and
health, to believe that his or her condition, sickness, or injury is of such a
nature that failure to get immediate medical care could result in: (i) placing
the Member’s health in serious jeopardy; (ii) serious impairment to bodily
functions; (iii) serious dysfunction of any bodily organ or part; (iv) serious
disfigurement; or (v) in the case of a pregnant woman, serious jeopardy to the
health of the fetus.

 

The final determination
of whether Emergency Services were required shall be made by the PacifiCare
medical director or designee, subject to appeal under the applicable

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

 

1

 

 

Member appeals procedure
or pursuant to the Dispute Resolution Procedure and Arbitration proceedings of
Section 7.5 of this Agreement.

 

1.19                           Medical
Group Service Area is the geographic area where Medical Group provides and
arranges for Medical Group Services as defined in Exhibit 1 to this
Agreement.

 

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

 

1.24                           Premium
is defined in Product Attachment A for the PacifiCare Commercial Health Plan and POS Plan and Product
Attachment C for the PacifiCare Secure Horizons Health Plan.

 

1.34                           DMHC is
the California Department of Managed Health Care.

 

1.35                           National
Preferred Transplant Networks (“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 by and between PacifiCare and the NTPN
Participating Providers.

 

1.36                           Referral
Services shall be those Covered Services, which are not Primary Care
Services and are provided by a Participating Provider upon referral from
Medical Group in accordance with the requirements of the PacifiCare Medical
Management Program.

 

1.37                           Standard
Service Capitation Amount.  The
Standard Service Capitation amount is the monthly per Commercial Plan Member
per Month Capitation Payment based on the age/gender/benefit factors, prior to
adjustments.  The Standard Service
Capitation Amount is found on the monthly capitation reports that accompany the
monthly Capitation Payment.

 

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

 

ARTICLE 2

DUTIES OF MEDICAL GROUP

 

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

 

2

 

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

 

3

 

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 us subcontracts
to be amended to comply with the forgoing by February 1, 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.

 

2.8.2                        Security
Reserves.

 

Security
Reserves/Letter of Credit.

 

(a)                                  Letter of Credit.  As a material condition to PacifiCare’s obligations pursuant to
this Agreement, Medical Group shall, upon the occurrence of a Triggering Event
as defined below, obtain for the benefit of PacifiCare a Letter of Credit to
secure Medical Group’s performance under this Agreement (“Letter of Credit”).

 

(b)                                 Letter of Credit Required Amount.  In the event that Medical Group is required, as defined below, to
obtain a Letter of Credit, the initial amount shall be ***.  PacifiCare may later request that Medical
Group increase the Letter of Credit if Medical Group fails to achieve for a
period of four (4) consecutive months a current ratio (current assets divided
by current liabilities) of 1.0 to 1.0 as determined by GAAP.  The fixed amount of the increase in the
letter of Credit that will be required shall equal *** PacifiCare’s portion,
which is the ratio of PacifiCare’s average capitation payment to Medical Group
for the previous twelve (12) months divided by Medical Group’s average
capitation revenue from all active HMO’s for the previous twelve (12) months,
applied to the difference between the actual current liabilities and current
assets as reported on the most recent quarter’s Medical Group balance
sheet.  In the event that the Letter of
Credit is required to be increased, then the increase shall occur in equal
portions over a four (4) month period of time. 
PacifiCare shall provide Medical Group with thirty (30) calendar days
written notice of any requirement to adjust the Letter of Credit Funding
Amount.  Should Medical Group, after
receiving notice from PacifiCare that the initial amount of the Letter of
Credit be adjusted, as defined m this paragraph achieve a current ratio of 1.0
to 1.0 as determined by GAAP and maintains that current ratio for twelve (12)
consecutive months, then the Letter of Credit shall

 

4

 

be reduced to the original *** level.  As used in the balance of this Section,
“Letter of Credit” shall refer to any initial Letter of Credit and any
subsequent Adjusted Letter of Credit.

 

(c)                                  Triggering Event Conditions.  Immediately upon the occurrence of a Triggering Event (as defined
in this subsection), Medical Group shall obtain the Letter of Credit in the
amount of the then applicable Letter of Credit Funding Amount.  A Triggering Event, for purposes of this
Section 2.8.2, shall mean any of the following: (i) Medical Group’s
failure to maintain a current ratio (current assets divided by current
liabilities) of 1.0 to 1.0, as determined by PacifiCare upon review of Medical
Group’s financial statements; (ii) Medical Group’s failure to maintain positive
Tangible Net Equity, calculated in a manner consistent with GAAP; (iii) Medical
Group’s failure to provide financial statements as outlined in
Section 2.8.1 of this Agreement; and (iv) Medical Group’s failure to meet
Commercial Health Plan and/or Secure Horizons Health Plan claims payment
timelines standards for a period of six (6) consecutive months.  In any event, PacifiCare shall provide
Medical Group with thirty (30) calendar days notice of a Triggering Event
occurrence.  Medical Group shall have
thirty (30) calendar days from the date PacifiCare notifies Medical Group of
the occurrence of the Triggering Event to cure to the satisfaction of
PacifiCare or both parties mutually agree on a remedy prior to PacifiCare
acting on Triggering Event as outlined in this Section, If the cure is not to
the satisfaction of PacifiCare or if the remedy is not mutually agreed to
within thirty (30) calendar days of PacifiCare notifying Medical Group,
PacifiCare shall act on the terms and conditions outlined in this Section.

 

(d)                                 Letter of Credit Terms and
Conditions.  Medical Group shall be responsible for any
cost, expense, or administrative fee in connection with the establishment and
maintenance of the Letter of Credit. 
Without limiting the foregoing, the Letter of Credit shall contain
language to include the identical terms and conditions as outlined in this
Section 2.8.2 and to be attached to this Agreement.  In the event that any of the terms and
conditions in the Letter of Credit are inconsistent with the terms and
conditions outlined in this Section 2.8.2, the terms and conditions of the
Letter of Credit shall then 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 of the Letter of Credit (the
“Issuer”) that (i) Medical Group is in default under this Section 2.8.2,
and has failed to cure such default following thirty (30) calendar days written
notice from PacifiCare; or (ii) Medical Group is insolvent.

 

The proceeds of the Letter of Credit (or the “Security
Deposit”) shall be the property of PacifiCare. 
PacifiCare shall use the Security Deposit solely to pay Medical Group’s
obligations under the Agreement.  PacifiCare
shall pay Medical Group the amount of any unused portion of the Security
Deposit after all of Medical Group’s financial obligations have been satisfied
and this Agreement has been terminated.

 

(e)                                  Letter
of Credit Term.  The Letter of
Credit, when required to be  in
place as provided above, shall remain in full force and effect until Medical
Group satisfies all its financial obligations under this Agreement (“the Letter
of Credit

 

5

 

Term”).  The Letter of Credit shall be for a minimum
of a six (6) month term.  PacifiCare
acknowledges and agrees that the Letter of Credit may not be issued at any one
time that would be for the entire Letter of Credit Term on the condition that
Medical Group agree to the following. 
Should Medical Group otherwise fail to obtain Letter of Credit for the
Letter of Credit Term from an issuer acceptable to PacifiCare by a date
fourteen (14) calendar 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 immediately establish a Security Deposit, as
outlined in Paragraph (f) below.

 

(f)                                    Interim Security Deposit
Establishment.  Upon the occurrence of a Triggering Event
and in the event that Medical Group has not established a Letter of Credit
within thirty (30) days of PacifiCare’s notice and as required by this Section,
PacifiCare may begin deducting six (6%) of Medical Group’s monthly Standard
Service Capitation Payment, up to the amount, as defined in Paragraph (b)
above, for the purpose of establishing a security deposit (also a “Security
Deposit” hereunder), PacifiCare shall pay Medical Group the Security Deposit
upon the earlier of (i) PacifiCare’s receipt of the fully funded Letter of
Credit, or (ii) all of Medical Group’s financial obligations have been
satisfied and this Agreement has been terminated.

 

(g)                                 The
financial statements for Prospect Medical Group, Prospect Health Source Medical
Group and Sierra Medical Group are all consolidated and reported under Prospect
Medical Group.  As such, any solvency
reserve requirement shall remain solely with the consolidated entity, namely
Prospect Medical Group.

 

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

 

6

 

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

 

3.2                                 Marketing.  PacifiCare shall make reasonable efforts to
market the Managed Care Plans Medical Group agrees that PacifiCare may, in its
discretion, use Medical Group’s name, address and telephone number as well as
the names, addresses and telephone numbers and specialties of its Participating
Providers in PacifiCare’s marketing and informational materials including,
without limitation, PacifiCare’s directory of Participating Providers.  Medical Group agrees that PacifiCare may, at
its discretion, exclude Medical Group and/or its Participating Providers from
certain Managed Care Plans or other new products or plans within Managed Care
Plans.  However, at Medical Group’s
request, PacifiCare agrees to meet and confer with Medical Group regarding the
criteria that Medical Group must meet in order to participate in such new
Managed Care Plans or other new products or plans within Managed Care Plans
Nothing in this Agreement shall be deemed to require PacifiCare to conduct any
specific marketing activities on behalf of Medical Group and its Participating
Providers or to identify Medical Group or its Participating Providers in any
specific PacifiCare marketing or informational materials.

 

3.3                                 Enrollment and Assignment of
Members.  PacifiCare shall be responsible for
distributing the PacifiCare Enrollment Packet to Members upon enrollment and at
open enrollment periods.  PacifiCare
shall provide benefit information to Members concerning the type, scope and
duration of benefits to which Members are entitled under the Managed Care
Plans.  Nothing in this Agreement shall
be construed to require PacifiCare to assign any minimum or maximum number of
Members to Medical Group or to utilize Medical Group for any Members in the
Medical Group Service Area.  At any time
during the term of this Agreement, without terminating this Agreement,
PacifiCare may cease assigning Members to Medical Group.

 

3.8                                 Transplant
Services.

 

3.8.1                        Transplant Services -
Definitions.

 

(a)                                  “Transplant
Services” are Covered Services for solid organ transplants, autologous
hemopoetic stem cell transplantation and allogeneic hemopoetic stem cell
transplantation as

 

7

 

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; and

 

(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 C 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
Transplant Services would have otherwise constituted NPTN Transplant Services.

 

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

 

8

 

PacifiCare has established, at its sole discretion, specified
Carve-Out Programs.  Specific Carve-Out
Program descriptions, policies and procedures are provided in Attachments B and
C 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, may be modified, from time to time, at the sole discretion of
PacifiCare.  PacifiCare shall use best
efforts to provide Medical Group with thirty (30) days prior written notice
before such modification.

 

ARTICLE 5

COMPENSATION

 

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, B and C of Exhibit 4.

 

Medical Group shall be responsible for assessing the
financial impact that the PacifiCare Sponsored Carve-Out Programs will have on
the Medical Group.  Upon such
assessment, Medical Group may choose not to participate in certain of the
PacifiCare-Sponsored Carve-Out Programs. 
In the event Medical Group chooses not to participate in any of the
optional PacifiCare-Sponsored Carve-Out Programs, Medical Group shall indicate
such decision on the relevant Exhibit describing the specific program attached
to this Amendment.

 

9

 

(a)                                  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, B and C 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 prescription(s).

 

(b)                                 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.

 

5.14                           Capitation
Payment Adjustment for NPTN Transplant Services.  Medical Group and PacifiCare agree that the compensation set
forth in Product Attachments A, B and C of this Agreement does not include amounts
attributable to NPTN Transplant Services that are PacifiCare’s financial
responsibility as set forth in this Agreement. 
Specifically, the Capitation Payment amounts set forth at Product
Attachments A, B and C have been adjusted to reflect that as of the Effective
Date, PacifiCare shall be responsible for Transplant Services to the extent set
forth on the DFR, including Exhibit 4 to the DFR.

 

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 be one dollar and fifty
cents ($1.50) per

 

10

 

Member per month for the Sherman Oaks network and Corona
network for the PacifiCare Commercial Health Plan.  The monthly incentive withhold shall initially be twenty-five
dollars ($25.00) per Member per month for the Secure Horizons Health Plan.  Based on quarterly settlement results,
PacifiCare will have the ability to increase the withhold to a maximum of
thirty dollars ($30.00) per Member per month for the Secure Horizons Health
Plan.  However, this increase shall not
be made prior to June 30, 2003. 
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.  The monthly incentive withholds shall not
exceed the amounts referenced above in this paragraph.

 

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 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.  The incentive program withhold described above shall be refunded
to the Medical Group at the time of the incentive program settlements, except
that Medical Group’s share of any incentive program deficits shall be deducted
from such refund.  Payments under the
combined incentive programs will be due from the owing party within one hundred
and 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, and in accordance with Medical
Group’s pharmacy incentive program.  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

 

11

 

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

 

5.7                                 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
in RBRVS, but included in a Medicare Fee Schedule, reimbursement shall be one
hundred percent (100%) of the Medicare rate for the current period as released
by 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

 

12

 

prevailing Medicare allowable; (iv) Anesthesia shall be
reimbursed at $38.00 ASA, excluding modifiers; (v) 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 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 5.11 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

 

13

 

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                           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.

 

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 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 Medical Management 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.

 

14

 

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 5.17 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 5.11 above. Medical Group requests for reconsideration of
recoupment actions initiated by PacifiCare 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.

 

ARTICLE 6

TERM AND TERMINATION

 

6.1                                 Term.  The term of this Agreement shall commence on January 1, 2003
(the “Commencement Date”), and end on December 31, 2004.  Thereafter, the term of this Agreement shall
be automatically extended for a one year term every January 1
(“Anniversary Date”), unless cither party provides the other with written
notice of such party’s intention not to extend the term no later than one
hundred eighty (180) days prior to each Anniversary Date or until this
Agreement is appropriately terminated by either party as provided herein.

 

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

 

(i)                                     Non-Payment.  Failure by PacifiCare to pay Capitation Payments due Medical
Group hereunder within thirty (30) days of the Capitation Payment due date or
failure by PacifiCare to make any other payments due Medical Group hereunder
within forty-five (45) days of any such payment’s due date and PacifiCare’s
failure to make such payment within the cure period provided at
Section 6.3.2, below.

 

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

 

15

 

(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;
or PacifiCare may terminate this Agreement in the event that PacifiCare and
Hospital fail to execute a satisfactory Hospital Agreement.  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.  However,
prior to or in conjunction with issuing such termination notice, PacifiCare
shall meet and confer with Medical Group regarding alternative hospital
arrangements and strategies.  The
requirements set forth in Section 6.3.3 shall not apply to termination by
PacifiCare pursuant to this Section.

 

6.3.3                        Notice of Termination and
Effective Date of Termination.  The party asserting cause for termination of
this Agreement (the “terminating party”) shall provide written notice of
termination to the other party.  The
notice of termination shall specify the breach or deficiency underlying the
cause for termination.  The party
receiving the written notice of termination shall have thirty (30) calendar
days from the receipt of such notice to cure the breach or deficiency to the
satisfaction of the terminating party (the “Cure Period”).  If such party fails to cure the breach or
deficiency to the satisfaction of the terminating party within the Cure Period
or if the breach or deficiency is not curable, the terminating party shall
provide written notice of failure to cure the breach or deficiency to the other
party following expiration of the Cure Period. 
This Agreement shall terminate upon receipt of the written notice of
failure to cure or at such 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.

 

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

 

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

 

16

 

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.

 

6.9                                 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.  Upon
Medical Group’s request, PacifiCare shall meet with Medical Group to discuss
alternatives to the termination of a Managed Care Plan.

 

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 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

 

17

 

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.

 

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

 

18

 

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
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)

 

PACIFICARE OF
CALIFORNIA

 

MEDICAL GROUP/IPA
SERVICES AGREEMENT

(PROFESSIONAL CAPITATION)

 

 

EXHIBIT 1

MEDICAL GROUP FACILITIES AND SERVICE AREA

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

(See Attached)

 

 

PACIFICARE OF CALIFORNIA

 

MEDICAL GROUP/IPA
SERVICES AGREEMENT

(PROFESSIONAL CAPITATION)

 

 

EXHIBIT 2

DELEGATED ACTIVITIES

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

(See Attached)

 

20

 

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)

(See Attached)

 

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:

  	
  Brian
  Jeffrey

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  Vice
  President

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
  12/10/02

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MEDICAL GROUP

  PROSPECT MEDICAL GROUP

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Peter G. Goll

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  Senior Vice President

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
    12-10-02

  	
   

  
						

 

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, as
amended.

 

1.1                                 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.

 

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

 

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

 

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

 

ARTICLE 2

DUTIES OF MEDICAL GROUP

 

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

 

2.2.1                        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

 

22

 

Providers are included in
Medical Group’s subcontracts with its Participating Providers.  A copy of the OPM Agreement shall be
provided to Medical Group concurrent with the execution of this Agreement.

 

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

 

ARTICLE 3

COMPENSATION

 

3.I                                   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. 
Effective January 1, 2003, the Base Capitation Rate shall be ***
per Commercial Plan Member per month for Prospect Sherman Oaks (PacifiCare Dec
#17615).  The Base Capitation Rate shall
be *** Commercial Plan Member per month for Prospect Corona (PacifiCare Dec #
TBD).  The Base Capitation Rate shall be
*** per Commercial Plan Member per month for Prospect Central (PacifiCare Dec #  11276). 
The Base Capitation Rate shall be *** per Commercial Plan Member per
month for Prospect Huntington Beach (PacifiCare Dec #  17597).  The Base
Capitation Rate shall be *** per Commercial Plan Member per month for Prospect
North (PacifiCare Dec # 3948).  The Base
Capitation Rate shall be *** per Commercial Plan Member per month for Nuestra
Familia (PacifiCare Dec # 11315).  The
Base Capitation Rate shall be *** per Commercial Plan Member per month for
Prospect South (PacifiCare Dec # 11277). 
Effective January 1, 2004, the Base Capitation Rate shall be ***
per Commercial Plan Member per month for Prospect Sherman Oaks (PacifiCare Dec # 17615). 
The Base Capitation Rate shall be *** per Commercial Plan Member per
month for Prospect Corona (PacifiCare Dec # TBD).  The Base Capitation Rate shall be *** per
Commercial Plan Member per month for Prospect Central (PacifiCare Dec #
11276).  The Base Capitation Rate shall
be *** per Commercial Plan Member per month for Prospect Huntington Beach
(PacifiCare Dec # 17597).  The Base Capitation Rate shall be *** per
Commercial Plan Member per month for Prospect North (PacifiCare Dec #
3948).  The Base Capitation Rate shall
be *** per Commercial Plan Member per month for Nuestra Familia (PacifiCare Dec
# 11315).  The Base Capitation Rate
shall be *** per Commercial Plan Member per month for Prospect South
(PacifiCare Dec # 11277).  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

 

23

 

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:

 

	
  Child 0

  	
   

  	
  1.9939

  
	
  Child 1

  	
   

  	
  1.2664

  
	
  Child 2 – 9

  	
   

  	
  0.4730

  
	
  Child 10 – 17

  	
   

  	
  0.4375

  
	
  Female 18 – 19

  	
   

  	
  0.7395

  
	
  Female 20 – 24

  	
   

  	
  1.4564

  
	
  Female 25 – 29

  	
   

  	
  1.6593

  
	
  Female 30 – 34

  	
   

  	
  1.4785

  
	
  Female 35 – 39

  	
   

  	
  1.2495

  
	
  Female 40 – 44

  	
   

  	
  1.3095

  
	
  Female 45 – 49

  	
   

  	
  1.2221

  
	
  Female 50 – 54

  	
   

  	
  1.5869

  
	
  Female 55 – 59

  	
   

  	
  1.7404

  
	
  Female 60 – 64

  	
   

  	
  2.0135

  
	
  Female 65 plus

  	
   

  	
  2.0630

  
	
  Male 18 – 19

  	
   

  	
  0.3554

  
	
  Male 20 – 24

  	
   

  	
  0.4774

  
	
  Male 25 – 29

  	
   

  	
  0.5702

  
	
  Male 30 – 34

  	
   

  	
  0.6033

  
	
  Male 35 – 39

  	
   

  	
  0.7038

  
	
  Male 40 – 44

  	
   

  	
  0.7700

  
	
  Male 45 – 49

  	
   

  	
  0.8742

  
	
  Male 50 – 54

  	
   

  	
  1.3235

  
	
  Male 55 – 59

  	
   

  	
  1.7024

  
	
  Male 60 - 64

  	
   

  	
  2.2284

  
	
  Male 64 plus

  	
   

  	
  2.3563

  

 

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 Commercial Plan shall initially be:

 

(i)                                     ISL Deductible shall be zero
dollars and zero 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.

 

24

 

(iii)                               ISL Coinsurance shall be zero
dollars and zero cents ($0.00) of Cost of Care in excess of the ISL Deductible.

 

If PacifiCare has approved of Medical Group’s opt out of the
ISL Program, the above amounts and percentages will reflect “zero.” In such
event, Medical Group shall be required to obtain ISL coverage from a
third-party insurance 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                  percent
(            %) per
Commercial Plan Member per calendar year.

 

(ii)                                  Reinsurance Premium shall
be                        percent
(            %) 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 and Commercial POS
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. 
Effective January 1, 2003, the Base Rate shall be *** per
Commercial Plan Member per month for Prospect Sherman Oaks (PacifiCare Dec #
17615).  The Base Rate shall be *** per
Commercial Plan Member per month for Prospect Corona (PacifiCare Dec # TBD).  The Base Rate shall be *** per Commercial
Plan Member per month for Prospect Central (PacifiCare Dec #  11276). 
The Base Rate shall be *** per Commercial Plan Member per month for
Prospect Huntington Beach (PacifiCare Dec # 17597).  The Base Rate shall be *** per Commercial Plan Member per month
for Prospect North (PacifiCare Dec #  3948).  The Base Rate shall be *** per Commercial
Plan Member per month for Nuestra Familia (PacifiCare Dec #  11315). 
The Base Rate shall be *** per Commercial Plan Member per month for
Prospect South (PacifiCare Dec #  11277).  Effective January 1, 2004, the Base
Rate shall be *** per Commercial Plan Member per month for Prospect Sherman
Oaks (PacifiCare Dec #  17615).  The Base Rate shall be *** per

 

25

 

Commercial Plan Member
per month for Prospect Corona (PacifiCare Dec# TBD).  The Base Rate shall be *** per Commercial Plan Member per month
for Prospect Central (PacifiCare Dec # 11276).  The Base Rate shall be *** per Commercial
Plan Member per month for Prospect Huntington Beach (PacifiCare Dec #
17597).  The Base Rate shall be *** per
Commercial Plan Member per month for Prospect North (PacifiCare Dec #
3948).  The Base Rate shall be *** per
Commercial Plan Member per month for Nuestra Familia (PacifiCare Dec # 11315).  The Base Rate shall be *** per Commercial
Plan Member per month for Prospect South (PacifiCare Dec #  11277).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 average Base Rate 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:

 

	
  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

  

 

26

 

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

 

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

 

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

 

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

 

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

 

(v)                                 Any and all amounts received
from third parties for Hospital 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, limited to $2.00 per 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 eighty percent
(80%) of the premium received by PacifiCare for Outpatient Pharmacy
Supplemental Benefits for Commercial Plan Members plus thirty one cents ($0.31)
per Commercial Plan Member per month, which amount is established as a credit
for rebates received from pharmaceutical manufacturers.

 

27

 

This credit may or may not reflect the total pharmaceutical
manufacturer rebate revenues received by PacifiCare.  The PIP Budget shall be retained by PacifiCare for purposes of
administering the PIP.

 

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

 

3.4.4                        PIP Surplus.  In the event the PIP Expense is less than the PIP Budget, zero
percent (0%) of the surplus shall be allocated to Medical Group.

 

3.4.5                        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.

 

28

 

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

 

	
   

  	
  PACIFICARE OF CALIFORNIA

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Brian Jeffrey

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  Vice
  President

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
  12/10/02

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MEDICAL GROUP

  PROSPECT MEDICAL GROUP

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Peter G. Goll

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
    Senior Vice
  President

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
    12-10-02

  	
   

  
							

 

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

DEFINlTlONS

 

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, as
amended.

 

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.

 

1.1                                 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.

 

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

 

ARTICLE 2

DUTIES OF MEDICAL GROUP

 

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

 

2.2                                 Reciprocity:
Reimbursement for Out-of-Network Services. 
If any of Medical Group’s Participating Providers provides
Out-of-Network Services to a Commercial POS Plan Member, such Medical Group
Participating Provider shall bill PacifiCare or the payor responsible for
payment for Out-of-Network Services for such services and agrees to accept full
payment at the Cost of Care, Neither Medical Group nor its Participating
Providers shall encourage Members to

 

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.

 

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

 

	
   

  	
  PACIFICARE OF CALIFORNIA

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Brian Jeffrey

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  Vice President

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
  12/10/02

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MEDICAL GROUP

  PROSPECT MEDICAL GROUP

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Peter G. Goll

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  Senior Vice President

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
  12-10-02

  	
   

  
						

 

31

 

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, and amounts used to fund the Market
Specific Benefit Program (as defined below).

 

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

 

32

 

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 Stale 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

 

33

 

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

 

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

 

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

 

3.1.2                        One Time Adjustment for 2003
Increases in Secure Horizons Revenue.

 

The Capitation Percentage set forth in section 3.1
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”).  Such assumption is based upon
the estimated average payment rates for Medicare Parts A and B overall for
calendar year 2003 as published by CMS in March 2003.  In the event that the actual Annual Increase
is more than three percent (3%), 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 Secure Horizons
Members), the increase shall be used by PacifiCare 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 However increases to Medical
Group’s SHIP Budget shall not be limited unless otherwise agreed by PacifiCare
and Medical Group.  The resulting
adjustment, if any, in the Capitation Percentage

 

34

 

shall begin with the January 2003 Standard Service
Capitation Payment.  This provision will
be in effect for the term of this Agreement.

 

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

 

(i)                                     ISL Deductible shall be zero
dollars ($0.00) per Secure Horizons Member per calendar year.

 

(ii)                                  ISL Premium shall be zero
percent (0.00%) 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 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                  ($               )
per Secure Horizons Member per calendar year.

 

(ii)                                  Reinsurance Premium shall
be                  percent
(              %)
of the Secure Horizons Revenue.

 

(iii)                               Reinsurance Coinsurance shall be
*** of the Cost of Care for amounts in excess of the Reinsurance Deductible but
less than *** and ***%) of the Cost of Care for amounts in excess of ***.

 

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

 

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

 

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

 

35

 

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

 

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

 

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

 

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

 

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

 

*** to Medical Group

*** to PacifiCare

 

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

 

*** to Medical Group

*** to PacifiCare

 

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

 

3.4                                 This
section 3.4 Market-Specific Benefit Program is deleted in its
entirety, with the numbering reserved for future use.

 

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

 

36

 

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

 

	
   

  	
  PACIFICARE OF CALIFORNIA

  
	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Brian Jeffrey

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  Vice
  President

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
  12/10/02

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MEDICAL GROUP

  PROSPECT MEDICAL GROUP

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Peter G. Goll

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  Senior
  Vice President

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
  12-10-02

  	
   

  
							

 

37

 

PACIFICARE OF
CALIFORNIA

 

MEDICAL GROUP/IPA
SERVICES AGREEMENT

(PROFESSIONAL
CAPITATION)

 

EXHIBIT 1

MEDICAL GROUP
FACILITIES AND SERVICE AREA

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

 

Medical Group Facilities:

 

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

 

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

 

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

 

Medical Group networks are
as follows:

 

	
  Prospect Sherman Oaks

  	
   

  	
  Dec #17615

  	
   

  	
  (Commercial Plans only)

  
	
  Prospect Corona

  	
   

  	
  Dec # TBD

  	
   

  	
  (Commercial Plans only)

  
	
  Prospect Central

  	
   

  	
  Dec # 11276

  	
   

  	
   

  
	
  Prospect Huntington
  Beach

  	
   

  	
  Dec # 17597

  	
   

  	
   

  
	
  Prospect North

  	
   

  	
  Dec # 3948

  	
   

  	
   

  
	
  Nuestra Familia

  	
   

  	
  Dec #11315

  	
   

  	
   

  
	
  Prospect South

  	
   

  	
  Dec #11277

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Hospital(s):

  	
   

  	
   

  	
   

  	
   

  
	
  Sherman Oaks Hospital and Health Center

  	
   

  	
   

  	
   

  	
  (Prospect Sherman Oaks)

  
	
  Corona Regional Medical Center

  	
   

  	
   

  	
   

  	
  (Prospect Corona)

  
	
  Placentia Linda Community Hospital

  	
   

  	
   

  	
   

  	
  (Prospect North)

  
	
  United Western Medical Center

  	
   

  	
   

  	
   

  	
  (Prospect Central)

  
	
  Irvine Medical Center

  	
   

  	
   

  	
   

  	
  (Prospect South)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  St. Francis Medical Center

  	
   

  	
   

  	
   

  	
  (Nuestra Familia)

  
							

 

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.

 

38

 

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.

 

39

 

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 

  ý  Delegated

  o  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

  

 

40

 

	
  Function

  	
   

  	
  Delegation

  Status

  	
   

  	
  Provider Group Responsibility/

  Performance Measure

  	
   

  	
  Reporting

  Frequency

  	
   

  	
  PacifiCare Oversight

  
	
  Concurrent Review

  	
   

  	
  ý  Delegated

  o  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 in 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

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Discharge Planning

  	
   

  	
  ý  Delegated

  o  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

  	
   

  	
  ý  Delegated

  o  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

  	
   

  	
  N/A

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Retrospective-Review

  Professional

  Retrospective Review Institutional

  	
   

  	
  

  

  

  ý  Delegated

  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

  

 

41

 

	
  Function

  	
   

  	
  Delegation

  Status

  	
   

  	
  Provider
  Group Responsibility/

  Performance Measure

  	
   

  	
  Reporting

  Frequency

  	
   

  	
  PacifiCare
  Oversight

  
	
  Denials

  Professional

  Institutional (Administrative/Facility Denials)

  	
   

  	
   

   

  ý  Delegated

  o  Not delegated

  o  Delegated

  ý  Not delegated

  	
   

  	
  For Denials of I 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.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  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 in the
  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

  	
   

  	
  o  Delegated

  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.

 

Medical Group agrees to work cooperatively with PacifiCare in all
delegated functions. As a Medical Group that shares risk with PacifiCare
through the Commercial Hospital Incentive Program (CHIP) and the Secure
Horizons Hospital Incentive Program (SHIP), Medical Group acknowledges that
PacifiCare’s Medical Management staff has a significant role in certain
functions including, but not limited to concurrent review, discharge planning,
and case management.

 

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

 

42

 

delegated status.

 

California Health and Safety Code Section 1370.4(a)(1)(B)(i) and (ii)
and Section 1370.4(a)(1)(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, IX:, 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 procedures
  submitted 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:

  •      License

  •      Hospital Admitting
  privileges, if applicable

  	
   

  	
  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

  
	
   

  	
   

  	
   

  	
   

  	
  •      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 practitioner’s 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 Podiatric Medical Boards

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

  	
   

  	
  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

  
	
   

  	
   

  	
   

  	
   

  	
  •      For all practitioners
  (except DDS): review of Medicare/ Medicaid sanctions, must cover the most
  recent 3 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 Plan(s) for elements of non-compliance

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  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

  	
   

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

  	
   

  	
  •      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

  •      Annual PacifiCare

  

 

46

 

	
  Function

  	
   

  	
  Delegation

  Status

  	
   

  	
  Provider Group Responsibility/

  Performance Measure

  	
   

  	
  Reporting

  Frequency

  	
   

  	
  PacifiCare

  Oversight

  
	
   

  	
   

  	
   

  	
   

  	
  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

  	
   

  	
   

  	
   

  	
  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
  PG.

  Recredentialing must be completed within 36 months
  of prior credentialing or recredentialing activity (as required 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 of the Federation of Chiropractic Licensing Boards

  •      DDSs: NPDB or State Board
  of Dental Examiners

  	
   

  	
  None

  	
   

  	
  •      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

  •      Annual PacifiCare
  Committee approval

  

 

47

 

	
  Function

  	
   

  	
  Delegation

  Status

  	
   

  	
  Provider Group Responsibility/

  Performance Measure

  	
   

  	
  Reporting

  Frequency

  	
   

  	
  PacifiCare

  Oversight

  
	
   

  	
   

  	
   

  	
   

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

  •      Non-physician behavioral
  health & other independently licensed practitioners: Appropriate state
  agency of 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

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  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

  o
  Not delegated

  	
   

  	
  Full compliance with NCQA Recredentialing Standards

  Recredentialing conducted every three years by the
  PG (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)

  •      Information from quality improvement activities

   

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

  	
   

  	
  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

  •      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 Plans(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

  	
   

  	
  New P&Ps submitted at least annually

  	
   

  	
  •      Initial onsite assessment

   

  •      Annual oversight

  

 

48

 

	
  Function

  	
   

  	
  Delegation

  Status

  	
   

  	
  Provider Group Responsibility/

  Performance Measure

  	
   

  	
  Reporting

  Frequency

  	
   

  	
  PacifiCare

  Oversight

  
	
   

  	
   

  	
   

  	
   

  	
  based on quality of care of service:

  P&Ps for reporting of quality deficiencies in
  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.

  	
   

  	
  Notification to PCC of any actions reported on a
  practitioner immediately.

  	
   

  	
  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 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.

  	
   

  	
  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

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Sub-Delegation of Credentialing

  	
   

  	
  ý  Delegated

  o  Not delegated

  	
   

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

   

  •      Detailed documentation of
  mutually agreed upon delegation agreement identifying:

  •      Listing of
  responsibilities

  	
   

  	
  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.

  

 

49

 

	
  Function

  	
   

  	
  Delegation

  Status

  	
   

  	
  Provider Group Responsibility/ Performance Measure

  	
   

  	
  Reporting

  Frequency

  	
   

  	
  PacifiCare

  Oversight

  
	
   

  	
   

  	
   

  	
   

  	
  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

  	
   

  	
   

  	
   

  	
  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/recredentialing 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.

 

50

 

PacifiCare will perform audits prior to delegation, 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.

 

MEDICAL
RECORDS DELEGATION GRID

 

	
  Function

  	
   

  	
  Delegation

  Status

  	
   

  	
  Provider Group Responsibility/

  Performance Measure

  	
   

  	
  Reporting

  Frequency

  	
   

  	
  PacifiCare

  Oversight

  
	
  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.

 

51

 

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.

 

CLAIMS
DELEGATION GRID

 

	
  Function

  	
   

  	
  Delegation

  Status

  	
   

  	
  Medical Group

  Responsibility/

  Performance Measure

  	
   

  	
  Reporting

  Frequency

  	
   

  	
  PacifiCare Oversight

  
	
  CMS Regulations

  	
   

  	
  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 onsite assessment utilizing approved
  oversight tool.

  Annual oversight assessment utilizing approved oversight tool.

  Additional onsite reviews as warranted by the plan utilizing approved
  oversight tool. Implementation of Corrective Action Plan(s) for elements of
  non-compliance.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  PacifiCare Standards for Commercial Products

  	
   

  	
  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

  	
   

  	
  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.

  

 

52

 

	
  Function

  	
   

  	
  Delegation

  Status

  	
   

  	
  Medical Group

  Responsibility/

  Performance Measure

  	
   

  	
  Reporting

  Frequency

  	
   

  	
  PacifiCare Oversight

  
	
   

  	
   

  	
   

  	
   

  	
  Provider reporting

  Appropriate IBNR reserves

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  State Regulations

  	
   

  	
  ý  Delegated

  o  Not delegated

  	
   

  	
  Compliance with State Regulations for claims
  processing COB and TPL review Compliance with all Medicaid Regulations

  	
   

  	
  N/A

  	
   

  	
  Initial onsite assessment utilizing approved
  oversight tool.

  Annual oversight assessment utilizing approved oversight tool.

  Additional onsite reviews as warranted by the plan utilizing approved
  oversight tool Implementation of Corrective Action Plan(s) for elements of
  non-compliance

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  OPM Requirements

  	
   

  	
  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

  	
   

  	
  ý  Delegated

  o  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

  Performing Provider Satisfaction Survey

  Process to settle claims in collections

  1099 production processes

  	
   

  	
  N/A

  	
   

  	
  Initial onsite assessment utilizing approved
  oversight tool.

  Annual oversight assessment utilizing approved oversight tool.

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

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

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Staffing

  	
   

  	
  ý  Delegated

  o  Not delegated

  	
   

  	
  Staffing sufficient to support claims volume and
  processing timeliness requirements including

  Staffing level’s

  Customer Service capabilities

  Past experience to 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 

  

 

53

 

	
  Function

  	
   

  	
  Delegation

  Status

  	
   

  	
  Medical Group

  Responsibility/

  Performance Measure

  	
   

  	
  Reporting

  Frequency

  	
   

  	
  PacifiCare Oversight

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  approved oversight tool.

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

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

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Encounter Date

  	
   

  	
  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.

 

54

 

QUALITY
IMPROVEMENT DELEGATION GRID

 

	
  Function

  	
   

  	
  Delegation

  Status

  	
   

  	
  Medical Group Responsibility/

  Performance Measure

  	
   

  	
  Reporting

  Frequency

  	
   

  	
  PacifiCare

  Oversight

  
	
  Program Structure

  	
   

  	
  Not Delegated

  	
   

  	
  Medical Group is required to maintain the following:

  QM Program

  Structure to carry out Quality Mgmt Program

  QM Program outlining structure and content Program description must be
  evaluated annually and updated as necessary

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Program Operations

  	
   

  	
  Not Delegated

  	
   

  	
  Participate and cooperate in PacifiCare’s Quality
  Improvement program

  Collect data for PacifiCare’s Quality Improvement Activities

  Carry out corrective actions required by PacifiCare

  Have a peer review process

  Participate in PacifiCare Quality Improvement Committee, (if requested)

  Provide PacifiCare access to Medical Records

  Identify barriers to improving key 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/
  Brian Jeffrey

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
    Vice President

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
    12/10/02

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  MEDICAL GROUP

  	
   

  
	
   

  	
  PROSPECT MEDICAL GROUP

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Peter G. Goll 

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  Senior Vice President

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
  12-10-02

  	
   

  
					

 

55

 

PACIFICARE
OF CALIFORNIA

 

MEDICAL
GROUP/IPA SERVICES AGREEMENT

(PROFESSIONAL
CAPITATION)

 

EXHIBIT
3

 

PRODUCT
ATTACHMENTS

VERIFICATION
OF RECEIPT OF PROVIDER MANUAL,

FORM
SUBSCRIBER AGREEMENT AND EVIDENCE OF COVERAGE

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

 

MEDICAL GROUP NAME: PROSPECT
MEDICAL GROUP

 

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

 

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

 

	
  By:

  	
  /s/ Peter G. Goll

  	
   

  
	
   

  	
   

  
	
  Title:

  	
  Senior Vice President

  	
   

  
	
   

  	
   

  
	
  Date:

  	
  12-10-02

  	
   

  
					

 

ATTACHMENTS:

 

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

 

	
   

  	
   

  	
  PacifiCare

  	
   

  	
  Medical Group

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  PacifiCare Commercial
  Health Plan

  	
   

  	
  /s/ BJ

  	
   

  	
  /s/ PG

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  PacifiCare Commercial POS
  Health Plan

  	
   

  	
  /s/ BJ

  	
   

  	
  /s/ PG

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Secure Horizons Health
  Plan (Excluding Sherman Oaks Network and Corona Network)

  	
   

  	
  /s/ BJ

  	
   

  	
  /s/ PG

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Division of Financial
  Responsibility

  	
   

  	
  /s/ BJ

  	
   

  	
  /s/ PG

  

 

56

 

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.

 

39

 

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

 

Division of Financial
Responsibility

 

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 and including Lupron and Viadur J Codes when used in conjunction
  with Chemotherapy, as follows: J9217, J9218, J9219}) - OP - Fac & Prof -
  CO

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Chemotherapy
  (including Chemotherapy Drugs - inject/Oral) - OP - Fac & Prof - SH

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Chemotherapy -
  IP – Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Chiropractic - Medical - OP - Fac & Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Chiropractic -
  Supplemental - OP – Fac & Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Circumcision -
  OP - Fac &  Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Diagnostic Tests
  - OP - Fac & Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  

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

 

57

 

	
  Service
  Description

  	
   

  	
  Medical

  Group

  	
   

  	
  Hospital

  Incentive

  Program

  	
   

  	
  PacifiCare

  	
   

  
	
  DME–IP

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  DME,
  Ostomy/Colostomy Supplies, Prosthetics/Orthortics - 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/Z1FT/TVF - 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)

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Hemophilia
  Factors – Not Part of Outpatient Pharmacy Benefits - OP - CO

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  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

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Injectables
  (excluding Hemophilia Factors for CO Members) - 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 Purity 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)

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Mental Health -
  IP and OP - Fac - CO

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Mental Health -
  IP and OP - Fac - SH

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Mental Health - IP and OP – Prof - CO

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  

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

 

58

 

	
  Service
  Description

  	
   

  	
  Medical

  Group

  	
   

  	
  Hospital

  Incentive

  Program

  	
   

  	
  PacifiCare

  	
   

  
	
  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

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Prosthetics -Surgical Implants - OP

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Radiation Therapy - IP & OP - Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Radiation Therapy - OP - Fac and/orfreestanding 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 denial 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 (3).

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Transplant Evaluation (excludes corneal); OP and IP Facility. See Note
  (3).

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Transplant Procedure and Procurement (excludes corneal); OP and IP
  Professional Services. See Note (3).

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Transplant Procedure and Procurement (excludes corneal); OP and IP
  Facility. See Note (3).

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Transplant Related Transportation and Housing – NPTN specific benefit.
  See Note (3).

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Transplant Follow-up (excludes corneal) OP and IP Professional; Year
  1. See Note (3).

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Transplant Follow-up (excludes corneal); OP and IP Facility; Year 1.
  (See Note (3)

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  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

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  

 

Notes:

 

(3)   PacifiCare’s responsibility for Transplant Services is
limited to those services provided in accordance with its National Transplant
Network Program as described in the Agreement, including Attachment C to this
Exhibit 4.

 

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

 

59

 

PACIFICARE
OF CALIFORNIA

 

MEDICAL
GROUP/IPA SERVICES AGREEMENT

 

EXHIBIT
4

ATTACHMENT
A

 

2003
SELF-INJECTABLE CARVE OUT PROGRAM (SICOP)

(This Exhibit 4,
Attachment A 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 A-1 to this Exhibit 4. Attachment A (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-lnjectables 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:

 

Medical
Group elects not to participate in the SICOP.

 

60

 

 

61

 

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.

 

62

 

Fulfillment
Time

 

	
  Day
  and Time when an authorized

  prescription is received by Injectable

  Pharmacy Vendor**

  	
   

  	
  Expected
  turn around time for delivery.

  
	
  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.

 

63

 

EXHIBIT 4, ATTACHMENT A,

ATTACHMENT A-1

 

PacifiCare
of California

2003
Self-lnjectable 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.

 

64

 

PACIFICARE OF CALIFORNIA

 

MEDICAL GROUP/IPA
SERVICES AGREEMENT

 

EXHIBIT 4

ATTACHMENT B

 

 

THIS EXHIBIT 4,
ATTACHMENT B INTENTIONALLY LEFT BLANK

 

65

 

PACIFICARE OF CALIFORNIA

 

MEDICAL GROUP/IPA
SERVICES AGREEMENT

 

EXHIBIT 4

ATTACHMENT C

 

NATIONAL
PROVIDER TRANSPLANT NETWORK

(This
Exhibit 4, Attachment C 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 Program 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,
Ieukopheresis consultation, CT scan,

tissue typing, MRJ.

 

66

 

•      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

 

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
of 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.

 

67

 

2.   AUTOLOGOUS HEMOPOET1C 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.

 

•      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

 

68

 

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

 

•      Treatment
for delayed stem cell engraftment (GCSF)

 

•      Transplant
related complications (medical care necessary related directly 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.

 

69

 

•    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.

 

•    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

neccessary 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)

 

70

 

•    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.

 

71

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