Document:

exv10w3

 

Exhibit 10.3

			
	HEALTHEASE OF FLORIDA, INC., d/b/a HealthEase
	 	Medicaid HMO Contract

AHCA CONTRACT NO. FA521

AMENDMENT NO. 1

     THIS CONTRACT, entered into between the STATE OF FLORIDA, AGENCY FOR
HEALTH CARE ADMINISTRATION, hereinafter referred to as the “Agency” and
HEALTHEASE OF FLORIDA, INC., hereinafter referred to as the “Vendor”, is hereby
amended as follows:

	 	 	1. Attachment I, section 10.4, Covered Services is hereby amended to now
read:

	 	 	 	The plan shall ensure the provision of services is sufficient in amount,
duration, and scope to reasonably be expected to achieve the purpose for
which the services are furnished and shall ensure the provision of the
following covered services as defined and specified in sections 10.1,
General and 10.8, Manner of Service Provision:

	 	 	 
	Child Health Check-Up

	 	Inpatient Hospital Services
	 
	 	 
	Community Mental Health Services

	 	Mental Health Targeted Case Management
	 
	 	 
	Family Planning Services

	 	Outpatient Hospital and Emergency Services
	 
	 	 
	Freestanding Dialysis Centers

	 	Physician Services
	 
	 	 
	Hearing Services

	 	Prescribed Drug Services
	 
	 	 
	Home Health Services and Durable Medical Equipment

	 	Therapy Services
	 
	 	 
	Independent Laboratory and X-Ray Services

	 	Visual Services

	 	 	 	The plan shall not arbitrarily deny or reduce the amount, duration, or
scope of a required service solely because of the diagnosis, type of
illness, or condition. The plan may place appropriate limits on a service
on the basis of criteria such as medical necessity or for utilization
control, consistent with this contract, provided the services furnished
can reasonably be expected to achieve their purpose.

	2.	 	Attachment I, section 10.8.11.2, Hysterectomies, Sterilizations, and
Abortions, is hereby amended to include the following:

	 	 	 	The plan may only provide for abortions in the following situations:

	 	•	 	If the pregnancy is the result of an act of rape or
incest or
	 
	 	•	 	The physician certifies that the woman is in danger of
death unless an abortion is performed.

	3.	 	Attachment I, section 20.4.1, Fraud Prevention Policies and Procedures,
the first paragraph is hereby amended to now read:

	 	 	 	The plan shall have administrative and management arrangements or
procedures and a mandatory compliance plan and shall comply with program
integrity requirement as required in 42 CFR 438.608 to develop and
maintain written policies and procedures for fraud and abuse prevention.
In addition, the policies shall contain the following:

AHCA Contract No. FA521, Amendment No. 1, Page 1 of 5

 

 

			
	HEALTHEASE OF FLORIDA, INC., d/b/a HealthEase
	 	Medicaid HMO Contract

	4.	 	Attachment I, section 20.10, Emergency Care Requirements is hereby
amended as follows:

	 	•	 	The first paragraph is hereby amended to include the following:
	 
	 	 	 	In addition, the plan may not deny payment for treatment obtained when a
representative of the plan instructs the enrollee to seek emergency
services.
	 
	 	•	 	section e. is hereby amended to now read:
	 
	 	 	 	If the member’s primary care physician responds to the notification, the
hospital physician and the primary care physician may discuss the
appropriate care and treatment of the member. The plan may have a member
of the hospital staff with whom it has a contract participate in the
treatment of the member within the scope of the physician’s hospital
staff privileges. The member may be transferred, in accordance with
state and federal law, to a hospital that has a contract with the plan
and has the service capability to treat the member’s emergency medical
condition. The attending emergency physician, or the provider actually
treating the enrollee, is responsible for determining when the enrollee
is sufficiently stabilized for transfer or discharge, and that
determination is binding on the entities identified in 42 CFR 438.114(b)
as responsible for coverage and payment. Notwithstanding any other state
law, a hospital may request and collect insurance or financial
information from a patient in accordance with federal law, which is
necessary to determine if the patient is a member of the plan, if
emergency services and care are not delayed.
	 
	 	•	 	section f. is hereby amended to now read:
	 
	 	 	 	In accordance with 42 CFR 438.114 and 42 CFR 422.113(c), the plan must
also cover poststabilization services without authorization, regardless
of whether the beneficiary obtains the service within or outside the
plan’s network for the following situations:

	5.	 	Attachment I, section 20.11, Grievance System Requirements, third
paragraph, Item a., is hereby amended to now read:

	 	a.	 	Enrollee rights to Medicaid fair hearing, the method for
obtaining a hearing, the rules that govern representation at the
hearing, and the DCF address for pursuing a fair hearing, which is
Office of Appeal Hearings, 1317 Winewood Boulevard, Building 5, Room
203, Tallahassee, Florida 32399-0700.

	6.	 	Attachment I, section 20.11.1, Appeal Process, Item b.7(b), is hereby
amended to now read:

	 	(b)	 	Information about how to request a Medicaid fair
hearing, including the DCF address for pursuing a fair hearing,
which is Office of Appeal Hearings, 1317 Winewood Boulevard,
Building 5, Room 203, Tallahassee, Florida 32399-0700.

	7.	 	Attachment I, section 20.11.2, Grievance Process is hereby amended as
follows:

	 	•	 	The first paragraph is hereby amended to include the following:
	 
	 	 	 	The grievance process must be completed in time to permit the
disenrollment to be effective in accordance with the timeframe specified
in 42 CFR 438.56(e)(1).
	 
	 	•	 	Item b.2(b) is hereby amended to now read:

AHCA Contract No. FA521, Amendment No. 1, Page 2 of 5

 

 

			
	HEALTHEASE OF FLORIDA, INC., d/b/a HealthEase
	 	Medicaid HMO Contract

	 	(b)	 	Information about how to request a Medicaid fair
hearing, including the DCF address for pursuing a fair hearing,
which is Office of Appeal Hearings, 1317 Winewood Boulevard,
Building 5, Room 203, Tallahassee, Florida 32399-0700.

	  8.	 	Attachment I, section 20.11.3, Medicaid Fair Hearing System, Item a., the
second paragraph is hereby amended to now read:

	 	 	 	The beneficiary or provider may request a Medicaid fair hearing by
contacting DCF at the Office of Appeal Hearings, 1317 Winewood
Boulevard, Building 5, Room 203 Tallahassee, Florida 32399-0700.

	9.	 	Attachment I, section 30.1, Marketing, Pre-enrollment Materials and
Post-enrollment Materials, Item f. is hereby deleted in it’s entirety.
	 
	10.	 	Attachment I, section 30.7.1, Member Services Handbook, the first
paragraph and sixth line, is hereby amended as follows:

	 	 	 	....both in and out of the plan’s service area; to include the enrollee
has a right to use any hospital or other setting for emergency use; the
extent to which...

	11.	 	Attachment I, section 40.8, Ownership and Management Disclosure, Item
b.1, the first subparagraph, is hereby amended to now read:

	 	 	 	Owns, indirectly or directly 5 percent or more of the plan’s
capital or stock, has ownership of 5% or more in a plan’s
provider or subcontractor, or receives 5 percent or more of its
profits;

	12.	 	Attachment I, section 70.10, Disputes, the first sentence is hereby
amended to now read:

	 	 	 	The plan may request in writing an interpretation of the contract from the
contract manager.

	13.	 	Attachment I, Section 90.0, Payment and Authorized Enrollment Levels, is
hereby amended effective as provided in Tables 2 and 3 shown below. The
amended rates below apply to services rendered beginning July 1, 2004.
Any capitation claims calculated based on rates different than those
indicated below are subject to recoupment in accordance with Section I.J,
of the Standard Contract.

Area wide Age-banded Capitation Rates for all agency areas
of the state other than Area 6 and Area 1.

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Area 02	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	<1 year	 	1-5	 	6-13	 	14-20 Male	 	14-20 Female	 	21-54 Male	 	21-54 Female	 	55-64	 	65+
	TANF/FC/SOBRA
	 	 	308.57	 	 	 	68.17	 	 	 	42.09	 	 	 	46.69	 	 	 	97.60	 	 	 	118.89	 	 	 	182.09	 	 	 	253.05	 	 	 	253.05	 
	SSI/No Medicare
	 	 	3048.45	 	 	 	366.34	 	 	 	187.89	 	 	 	197.31	 	 	 	197.31	 	 	 	564.87	 	 	 	564.87	 	 	 	545.39	 	 	 	545.39	 
	SSI/Part B
	 	 	323.29	 	 	 	323.29	 	 	 	323.29	 	 	 	323.29	 	 	 	323.29	 	 	 	323.29	 	 	 	323.29	 	 	 	323.29	 	 	 	323.29	 
	SSI/Part A & B
	 	 	312.99	 	 	 	312.99	 	 	 	312.99	 	 	 	312.99	 	 	 	312.99	 	 	 	312.99	 	 	 	312.99	 	 	 	312.99	 	 	 	218.99	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Area 03	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	<1 year	 	1-5	 	6-13	 	14-20 Male	 	14-20 Female	 	21-54 Male	 	21-54 Female	 	55-64	 	65+
	TANF/FC/SOBRA
	 	 	350.92	 	 	 	78.21	 	 	 	49.06	 	 	 	54.22	 	 	 	112.21	 	 	 	138.15	 	 	 	210.55	 	 	 	294.57	 	 	 	294.57	 
	SSI/No Medicare
	 	 	3231.65	 	 	 	390.26	 	 	 	202.93	 	 	 	212.35	 	 	 	212.35	 	 	 	607.41	 	 	 	607.41	 	 	 	586.66	 	 	 	586.66	 
	SSI/Part B
	 	 	302.31	 	 	 	302.31	 	 	 	302.31	 	 	 	302.31	 	 	 	302.31	 	 	 	302.31	 	 	 	302.31	 	 	 	302.31	 	 	 	302.31	 
	SSI/Part A & B
	 	 	288.40	 	 	 	288.40	 	 	 	288.40	 	 	 	288.40	 	 	 	288.40	 	 	 	288.40	 	 	 	288.40	 	 	 	288.40	 	 	 	201.67	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Area 04	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	<1 year	 	1-5	 	6-13	 	14-20 Male	 	14-20 Female	 	21-54 Male	 	21-54 Female	 	55-64	 	65+
	TANF/FC/SOBRA
	 	 	316.95	 	 	 	71.10	 	 	 	44.92	 	 	 	49.61	 	 	 	101.93	 	 	 	126.35	 	 	 	191.96	 	 	 	269.58	 	 	 	269.58	 
	SSI/No Medicare
	 	 	3103.82	 	 	 	374.05	 	 	 	193.41	 	 	 	202.51	 	 	 	202.51	 	 	 	580.16	 	 	 	580.16	 	 	 	559.62	 	 	 	559.62	 
	SSI/Part B
	 	 	273.15	 	 	 	273.15	 	 	 	273.15	 	 	 	273.15	 	 	 	273.15	 	 	 	273.15	 	 	 	273.15	 	 	 	273.15	 	 	 	273.15	 
	SSI/Part A & B
	 	 	292.54	 	 	 	292.54	 	 	 	292.54	 	 	 	292.54	 	 	 	292.54	 	 	 	292.54	 	 	 	292.54	 	 	 	292.54	 	 	 	204.72	 

AHCA Contract No. FA521, Amendment No. 1, Page 3 of 5

 

 

			
	HEALTHEASE OF FLORIDA, INC., d/b/a HealthEase
	 	Medicaid HMO Contract

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Area 05	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	<1 year	 	1-5	 	6-13	 	14-20 Male	 	14-20 Female	 	21-54 Male	 	21-54 Female	 	55-64	 	65+
	TANF/FC/SOBRA
	 	 	345.76	 	 	 	77.31	 	 	 	48.55	 	 	 	53.69	 	 	 	110.74	 	 	 	136.76	 	 	 	208.19	 	 	 	291.55	 	 	 	291.55	 
	SSI/No Medicare
	 	 	3265.62	 	 	 	394.06	 	 	 	204.41	 	 	 	214.18	 	 	 	214.18	 	 	 	612.49	 	 	 	612.49	 	 	 	591.04	 	 	 	591.04	 
	SSI/Part B
	 	 	266.55	 	 	 	266.55	 	 	 	266.55	 	 	 	266.55	 	 	 	266.55	 	 	 	266.55	 	 	 	266.55	 	 	 	266.55	 	 	 	266.55	 
	SSI/Part A & B
	 	 	309.27	 	 	 	309.27	 	 	 	309.27	 	 	 	309.27	 	 	 	309.27	 	 	 	309.27	 	 	 	309.27	 	 	 	309.27	 	 	 	216.32	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Area 07	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	<1 year	 	1-5	 	6-13	 	14-20 Male	 	14-20 Female	 	21-54 Male	 	21-54 Female	 	55-64	 	65+
	TANF/FC/SOBRA
	 	 	337.19	 	 	 	75.53	 	 	 	47.77	 	 	 	52.81	 	 	 	108.40	 	 	 	134.29	 	 	 	204.16	 	 	 	286.57	 	 	 	286.57	 
	SSI/No Medicare
	 	 	3217.89	 	 	 	389.79	 	 	 	203.90	 	 	 	213.35	 	 	 	213.35	 	 	 	610.58	 	 	 	610.58	 	 	 	589.11	 	 	 	589.11	 
	SSI/Part B
	 	 	265.77	 	 	 	265.77	 	 	 	265.77	 	 	 	265.77	 	 	 	265.77	 	 	 	265.77	 	 	 	265.77	 	 	 	265.77	 	 	 	265.77	 
	SSI/Part A & B
	 	 	283.96	 	 	 	283.96	 	 	 	283.96	 	 	 	283.96	 	 	 	283.96	 	 	 	283.96	 	 	 	283.96	 	 	 	283.96	 	 	 	198.62	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Area 08	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	<1 year	 	1-5	 	6-13	 	14-20 Male	 	14-20 Female	 	21-54 Male	 	21-54 Female	 	55-64	 	65+
	TANF/FC/SOBRA
	 	 	296.66	 	 	 	66.37	 	 	 	41.76	 	 	 	46.19	 	 	 	95.19	 	 	 	117.62	 	 	 	179.02	 	 	 	250.96	 	 	 	250.96	 
	SSI/No Medicare
	 	 	3079.30	 	 	 	371.80	 	 	 	192.49	 	 	 	201.68	 	 	 	201.68	 	 	 	577.71	 	 	 	577.71	 	 	 	557.45	 	 	 	557.45	 
	SSI/Part B
	 	 	243.56	 	 	 	243.56	 	 	 	243.56	 	 	 	243.56	 	 	 	243.56	 	 	 	243.56	 	 	 	243.56	 	 	 	243.56	 	 	 	243.56	 
	SSI/Part A & B
	 	 	285.08	 	 	 	285.08	 	 	 	285.08	 	 	 	285.08	 	 	 	285.08	 	 	 	285.08	 	 	 	285.08	 	 	 	285.08	 	 	 	199.47	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Area 09	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	<1 year	 	1-5	 	6-13	 	14-20 Male	 	14-20 Female	 	21-54 Male	 	21-54 Female	 	55-64	 	65+
	TANF/FC/SOBRA
	 	 	316.78	 	 	 	70.74	 	 	 	44.52	 	 	 	49.17	 	 	 	101.48	 	 	 	125.24	 	 	 	190.60	 	 	 	266.97	 	 	 	266.97	 
	SSI/No Medicare
	 	 	3344.05	 	 	 	405.22	 	 	 	211.12	 	 	 	221.15	 	 	 	221.15	 	 	 	633.22	 	 	 	633.22	 	 	 	610.93	 	 	 	610.93	 
	SSI/Part B
	 	 	267.20	 	 	 	267.20	 	 	 	267.20	 	 	 	267.20	 	 	 	267.20	 	 	 	267.20	 	 	 	267.20	 	 	 	267.20	 	 	 	267.20	 
	SSI/Part A & B
	 	 	320.32	 	 	 	320.32	 	 	 	320.32	 	 	 	320.32	 	 	 	320.32	 	 	 	320.32	 	 	 	320.32	 	 	 	320.32	 	 	 	224.19	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Area 10	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	<1 year	 	1-5	 	6-13	 	14-20 Male	 	14-20 Female	 	21-54 Male	 	21-54 Female	 	55-64	 	65+
	TANF/FC/SOBRA
	 	 	328.74	 	 	 	73.77	 	 	 	46.68	 	 	 	51.61	 	 	 	105.94	 	 	 	131.31	 	 	 	199.49	 	 	 	280.33	 	 	 	280.33	 
	SSI/No Medicare
	 	 	4151.82	 	 	 	503.54	 	 	 	263.75	 	 	 	275.32	 	 	 	275.32	 	 	 	788.23	 	 	 	788.23	 	 	 	761.08	 	 	 	761.08	 
	SSI/Part B
	 	 	287.04	 	 	 	287.04	 	 	 	287.04	 	 	 	287.04	 	 	 	287.04	 	 	 	287.04	 	 	 	287.04	 	 	 	287.04	 	 	 	287.04	 
	SSI/Part A & B
	 	 	351.55	 	 	 	351.55	 	 	 	351.55	 	 	 	351.55	 	 	 	351.55	 	 	 	351.55	 	 	 	351.55	 	 	 	351.55	 	 	 	245.95	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Area 11	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	<1 year	 	1-5	 	6-13	 	14-20 Male	 	14-20 Female	 	21-54 Male	 	21-54 Female	 	55-64	 	65+
	TANF/FC/SOBRA
	 	 	409.89	 	 	 	91.51	 	 	 	57.28	 	 	 	63.45	 	 	 	131.27	 	 	 	161.21	 	 	 	245.94	 	 	 	343.29	 	 	 	343.29	 
	SSI/No Medicare
	 	 	4561.77	 	 	 	556.46	 	 	 	288.69	 	 	 	302.80	 	 	 	302.80	 	 	 	869.67	 	 	 	869.67	 	 	 	836.38	 	 	 	836.38	 
	SSI/Part B
	 	 	453.72	 	 	 	453.72	 	 	 	453.72	 	 	 	453.72	 	 	 	453.72	 	 	 	453.72	 	 	 	453.72	 	 	 	453.72	 	 	 	453.72	 
	SSI/Part A & B
	 	 	429.61	 	 	 	429.61	 	 	 	429.61	 	 	 	429.61	 	 	 	429.61	 	 	 	429.61	 	 	 	429.61	 	 	 	429.61	 	 	 	297.22	 

Table 3.

Area 6 or Area 1 Age-banded Capitation Rates, Including Community Mental
Health and Mental Health Targeted Case Management.

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Area 01	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	<1 year	 	1-5	 	6-13	 	14-20 Male	 	14-20 Female	 	21-54 Male	 	21-54 Female	 	55-64	 	65+
	TANF/FC/SOBRA
	 	 	308.58	 	 	 	69.00	 	 	 	49.05	 	 	 	52.61	 	 	 	103.52	 	 	 	121.46	 	 	 	184.66	 	 	 	257.30	 	 	 	257.30	 
	SSI/No Medicare
	 	 	3048.46	 	 	 	371.81	 	 	 	243.40	 	 	 	238.17	 	 	 	238.17	 	 	 	607.82	 	 	 	607.82	 	 	 	569.75	 	 	 	569.75	 
	SSI/Part B
	 	 	330.18	 	 	 	330.18	 	 	 	330.18	 	 	 	330.18	 	 	 	330.18	 	 	 	330.18	 	 	 	330.18	 	 	 	330.18	 	 	 	330.18	 
	SSI/Part A & B
	 	 	328.66	 	 	 	328.66	 	 	 	328.66	 	 	 	328.66	 	 	 	328.66	 	 	 	328.66	 	 	 	328.66	 	 	 	328.66	 	 	 	234.66	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Area 06	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	<1 year	 	1-5	 	6-13	 	14-20 Male	 	14-20 Female	 	21-54 Male	 	21-54 Female	 	55-64	 	65+
	TANF/FC/SOBRA
	 	 	330.07	 	 	 	75.91	 	 	 	61.92	 	 	 	67.67	 	 	 	122.23	 	 	 	135.83	 	 	 	204.29	 	 	 	282.98	 	 	 	282.98	 
	SSI/No Medicare
	 	 	3017.05	 	 	 	371.69	 	 	 	265.72	 	 	 	243.82	 	 	 	243.82	 	 	 	647.81	 	 	 	647.81	 	 	 	587.26	 	 	 	587.26	 
	SSI/Part B
	 	 	242.29	 	 	 	242.29	 	 	 	242.29	 	 	 	242.29	 	 	 	242.29	 	 	 	242.29	 	 	 	242.29	 	 	 	242.29	 	 	 	242.29	 
	SSI/Part A & B
	 	 	288.09	 	 	 	288.09	 	 	 	288.09	 	 	 	288.09	 	 	 	288.09	 	 	 	288.09	 	 	 	288.09	 	 	 	288.09	 	 	 	202.64	 

	14.	 	Attachment I, section 100.0, Glossary, is hereby amended to include the
following:

	 	 	 	Post-stabilization Care Services – as defined in 42 CFR 438.114, means
covered services, related to an emergency medical condition that are
provided after an enrollee is stabilized in order to maintain the
stabilized condition, or, under the circumstances described in paragraph
(e) of 42 CFR 438.114, to improve or resolve the enrollee’s condition.

	15.	 	This amendment shall begin on August 12, 2004, or the date on which the
amendment has been signed by both parties, whichever is later.

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

     All provisions not in conflict with this amendment are still in effect and
are to be performed at the level specified in the Contract.

     This amendment and all its attachments are hereby made a part of the
Contract.

     This amendment cannot be executed unless all previous amendments to this
Contract have been fully executed.

AHCA Contract No. FA521, Amendment No. 1, Page 4 of 5

 

 

	 	 
	     HEALTHEASE OF FLORIDA, INC., d/b/a HealthEase	Medicaid HMO Contract

     IN WITNESS WHEREOF, the parties hereto have caused this 5 page amendment
(including all attachments) to be executed by their officials thereunto duly
authorized.

	 	 	 	 	 	 	 	 	 
	HEALTHEASE OF FLORIDA, INC.	 	 	 	STATE OF FLORIDA, AGENCY FOR
	 	 	 	 	 	 	HEALTH CARE ADMINISTRATION
	 
	 	 	 	 	 	 	 	 
	SIGNED

BY:

	 	 	 	 	 	SIGNED

BY:	 	 
	

	 	
 
	 	 	 	 	 	
 
	

	 	 	 	 	 	 	 	 
	NAME:

	 	 	 	 	 	NAME:
	 	Alan Levine
	

	 	
 
	 	 	 	 	 	
 
	 
	 	 	 	 	 	 	 	 
	TITLE:

	 	 	 	 	 	TITLE:
	 	Secretary
	

	 	
 
	 	 	 	 	 	
 
	 
	 	 	 	 	 	 	 	 
	DATE:

	 	 	 	 	 	DATE:	 	 
	

	 	
 
	 	 	 	 	 	
 

AHCA Contract No. FA521, Amendment No. 1, Page 5 of 5exv10w4

 

EXHIBIT 10.4

PREPAYMENT AND SETTLEMENT ALLOCATION AGREEMENT

     This PREPAYMENT AND SETTLEMENT ALLOCATION AGREEMENT (this “Agreement”) is
made and entered into as of August 31, 2004, by and among WellCare Health
Plans, Inc., a Delaware corporation and successor-in-interest to WellCare
Holdings, LLC, a Delaware limited liability company (“Parent”); WCG Health
Management, Inc., a Delaware corporation f/k/a WellCare Health Plans, Inc. and
WellCare Acquisition Company (“WellCare”); and Kiran C. Patel (the “Stockholder
Representative”), acting on behalf of Pallavi Patel, Pradip C. Patel, Swati
Patel, Rupesh Shah and Nita Shah as well as himself (collectively, the
“Stockholders”). Parent, WellCare and the Stockholder Representative are
sometimes referred to in this Agreement individually as a “Party” and
collectively as the “Parties,” and Parent, WellCare and its Subsidiaries are
sometimes referred to in this Agreement collectively as the “WellCare
Companies”.

RECITALS

     A. Parent, WellCare and the Stockholders are parties to that certain
Purchase Agreement, dated as of May 17, 2002 (as subsequently amended, the
“Purchase Agreement”), pursuant to which WellCare acquired all of the
outstanding equity securities of Well Care HMO, Inc., a Florida corporation,
HealthEase of Florida, Inc., a Florida corporation, Comprehensive Health
Management, Inc., a Florida corporation, and Comprehensive Health Management of
Florida, L.C., a Florida limited liability company.

     B. On February 12, 2004, Parent, WellCare and the Stockholders entered
into that certain Amendment and Settlement Agreement (the “Settlement
Agreement”), pursuant to which the parties thereto settled certain disputes
among them and amended the Purchase Agreement and certain other documents
related thereto.

     C. A portion of the purchase price under the Purchase Agreement was paid
by issuance of that certain Senior Subordinated Non-Negotiable Promissory Note
dated July 31, 2002, in the original principal amount of $53,000,000, issued by
WellCare to the Stockholder Representative on behalf of the Stockholders, as
subsequently amended and restated in its entirety by that certain Amended and
Restated Senior Subordinated Non-Negotiable Promissory Note dated February 12,
2004, in the original principal amount of $116,240,692, issued by WellCare to
the Stockholder Representative on behalf of the Stockholders (the “Restated
Note”).

     D. On May 11, 2004, Parent, WellCare and the Stockholders entered into
that certain Prepayment and Amendment Agreement (the “First Prepayment
Agreement”), pursuant to which, among other things, WellCare prepaid a portion
of the outstanding principal amount of the Restated Note and the parties
thereto amended the Restated Note.

     E. Also on May 11, 2004, pursuant to the First Prepayment Agreement,
WellCare, the Stockholder Representative (acting on behalf of all of the
Stockholders) and Wachovia Bank, National Association (the “Escrow Agent”),
entered into that certain Escrow Agreement (the “Escrow Agreement”), pursuant
to which a portion of the amount prepaid pursuant to the First Prepayment
Agreement was deposited into escrow to secure a portion of the Stockholders’

 

 

indemnification obligations under the Purchase Agreement with respect to
the E.S. Thomas Claim and any E.S. Thomas Losses (as such terms are defined in
the Settlement Agreement).

     F. The Parties now desire to provide for the settlement of the E.S. Thomas
Claim, the allocation of their respective obligations with respect to all E.S.
Thomas Losses and the prepayment of a portion of the remaining principal amount
of the Restated Note, and to provide for certain other matters, all as set
forth herein.

     NOW, THEREFORE, in consideration of the covenants and promises set forth
herein, and for other good and valuable consideration (the receipt and
sufficiency of which are hereby acknowledged), intending to be legally bound,
the Parties agree as follows:

     1. Definitions. Capitalized terms used and not defined herein
shall have the respective meanings ascribed to them in the Purchase Agreement.

     2. Prepayment. Upon the execution of this Agreement by each of the
Parties, WellCare shall pay to the Stockholder Representative, on behalf of the
Stockholders, the sum of $3,240,692 (the “Prepayment”), as a prepayment of
principal under the Restated Note. Notwithstanding anything to the contrary in
the Restated Note, the full amount of the Prepayment shall be deemed to be a
prepayment of principal under the Restated Note. As a result of the
Prepayment, the remaining outstanding principal amount under the Restated Note
shall be $25,000,000. All payments to the Stockholder Representative under
this Agreement shall be made by wire transfer of immediately available funds to
an account designated by the recipient.

     3. E.S. Thomas Settlement.

          (a) Each of the Parties (i) acknowledges receipt of the proposed
Settlement Agreement, to be entered into on or about the date hereof, between
one or more of the WellCare Companies and E.S. Thomas & Associates, Inc. (the
“E.S. Thomas Settlement Agreement”), pursuant to which the E.S. Thomas Claim
will be settled in full in consideration for the payment described therein (the
“E.S. Thomas Settlement Payment”), and (ii) acknowledges, agrees and consents,
pursuant to Section 9.2(e) of the Purchase Agreement, to the settlement of the
E.S. Thomas Claim pursuant to the terms set forth in the E.S. Thomas Settlement
Agreement.

          (b) The Stockholder Representative acknowledges that the WellCare
Companies have incurred attorneys’ fees and expenses in connection with the
E.S. Thomas Claim in the amount of $2,452,198 (the “E.S. Thomas Legal Fees”),
and that $2,000,000 of such amount, together with the E.S. Thomas Settlement
Payment, constitutes Indemnifiable Losses pursuant to the Purchase Agreement.

          (c) The Parties stipulate and agree that (i) $2,000,000 of the E.S. Thomas
Legal Fees shall be applied against, and shall satisfy in full, the Buyer
Indemnification Threshold, (ii) notwithstanding anything to the contrary
contained in the Purchase Agreement or the Settlement Agreement, the WellCare
Companies shall be responsible for the amount of the E.S. Thomas Legal Fees in
excess of $2,000,000, subject to the provisions of Section 3(e) below, and
(iii) Exhibit A attached hereto and incorporated herein sets forth the
final amount of the Stockholder Indemnification Cap and shall constitute the
“Cap Determination Notice” for all

2

 

purposes under the Settlement Agreement, and shall be final and binding
upon the Parties (and the Stockholder Representative hereby waives any right to
object to the Cap Determination Notice, notwithstanding any provision in the
Settlement Agreement to the contrary).

          (d) WellCare shall be entitled to be reimbursed, from the Escrow Account
established pursuant to the Escrow Agreement, for the full amount of the E.S.
Thomas Settlement Payment, and the remainder of the Escrow Account shall be
payable to the Stockholder Representative on behalf of the Stockholders. Upon
the execution and delivery of this Agreement, WellCare and the Stockholder
Representative shall execute and deliver to the Escrow Agent a Certificate of
Instruction in the form of Exhibit B attached hereto, instructing the
Escrow Agent to disburse the proceeds of the Escrow Account in accordance with
this Section 3(d).

          (e) Notwithstanding anything to the contrary in the Purchase Agreement, in
the event that the WellCare Companies collect any insurance proceeds with
respect to the E.S. Thomas Claim or any E.S. Thomas Losses, such proceeds shall
be allocated as follows: (i) first, to the WellCare Companies in reimbursement
of any costs or expenses paid or incurred to collect such insurance proceeds,
including, without limitation, attorneys’ fees and costs, (ii) second, to the
WellCare Companies to the extent of the amount of the E.S. Thomas Legal Fees in
excess of $2,000,000, and (iii) third, the balance, if any, shall be split
equally between the WellCare Companies, on the one hand, and the Stockholder
Representative, on behalf of the Stockholders, on the other hand.

     4. Representations and Warranties.

          (a) The Stockholder Representative hereby represents and warrants to
Parent and WellCare that (i) he is under no obligation or restriction that
would in any way interfere or conflict with his or her performance hereunder,
and (ii) the execution and delivery of this Agreement by him will not result in
a violation or breach of, or constitute (with or without the giving of notice
or lapse of time or both) a default (or give rise to any right of termination,
cancellation, payment or acceleration) under, any Credit Agreement, note or any
other contract or agreement between any lender or any other Person, including
Bank of America, N.A., and any Stockholder.

          (b) Each of Parent and WellCare hereby represents and warrants to the
Stockholder Representative that (i) such Party is under no obligation or
restriction that would in any way interfere or conflict with its performance
hereunder, and (ii) the execution and delivery of this Agreement and/or the
Escrow Agreement by such Party will not result in a violation or breach of, or
constitute (with or without the giving of notice or lapse of time or both) a
default (or give rise to any right of termination, cancellation, payment or
acceleration) under, any Credit Agreement, note or any other contract or
agreement between any lender or any other Person.

     5. Confidentiality. Each of the Parties hereby agrees to keep the
terms of this Agreement confidential; provided, however, that the foregoing
shall not prevent or restrict any disclosure (a) to such Party’s professional
advisors, financing sources or prospective financing sources, (b) which is
required by order of court or Governmental or Regulatory Authority with
subpoena powers (provided that the Party subject thereto shall have provided
the other Parties

3

 

with prior notice of such order and an opportunity to object
or seek a protective order and take any other available action), (c) in the
course of any Action or Proceeding between any of the Parties hereto or (d) by
WellCare or any of its affiliates to the extent required or desirable under
applicable Law or the rules of any stock exchange.

     6. Entire Agreement; Modification. This Agreement and the Exhibits
hereto constitute the entire agreement among the parties with respect to the
subject matter hereof and supersede all prior agreements and understandings,
both written and oral, among the parties with respect to the subject matter
hereof. This Agreement may be amended or modified only by an instrument in
writing duly executed by the Parties.

     7. Purchase Agreement, Restated Note, Settlement Agreement and First
Prepayment Agreement Effective. Except as otherwise specifically set forth
in this Agreement, all provisions of the Purchase Agreement, the Restated Note
(including the calculation of interest as provided therein), the Settlement
Agreement and the First Prepayment Agreement which are not in conflict with the
terms of this Agreement shall remain in full force and effect.

     8. Waiver. Any term or condition of this Agreement may be waived
at any time by the Party that is entitled to the benefit thereof, but no such
waiver shall be effective unless set forth in a written instrument duly
executed by or on behalf of the Party waiving such term or condition. No
waiver by any Party of any term or condition of this Agreement, in any one or
more instances, shall be deemed to be or construed as a waiver of the same or
any other term or condition of this Agreement on any future occasion. All
remedies, either under this Agreement or by Law or otherwise afforded, will be
cumulative and not alternative.

     9. Binding Effect. This Agreement is binding upon, inures to the
benefit of and is enforceable by the Parties and their respective successors
and assigns.

     10. Headings. The headings used in this Agreement have been
inserted for convenience of reference only and do not define or limit the
provisions hereof.

     11. Invalid Provisions. If any provision of this Agreement is held
to be illegal, invalid or unenforceable under any present or future Law, and if
the rights or obligations of any Party under this Agreement will not be
materially and adversely affected thereby, (a) such provision will be fully
severable, (b) this Agreement will be construed and enforced as if such
illegal, invalid or unenforceable provision had never comprised a part hereof,
(c) the remaining provisions of this Agreement will remain in full force and
effect and will not be affected by the illegal, invalid or unenforceable
provision or by its severance herefrom and (d) in lieu of such illegal, invalid
or unenforceable provision, there will be added automatically as a part of this
Agreement a legal, valid and enforceable provision as similar in terms to such
illegal, invalid or unenforceable provision as may be possible.

     12. Governing Law. This Agreement shall be governed by and
construed in accordance with the domestic laws of the State of New York,
without giving effect to any choice of law or conflict of law provision or rule
(whether of the State of New York or any other
jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of New York.

4

 

     13. Jurisdiction; Venue. All actions and proceedings arising out
of or relating to this Agreement shall be heard and determined in any Florida
state or federal court sitting in the City of Tampa, Florida, and each Party
hereby irrevocably accepts and consents to the exclusive personal jurisdiction
of those courts for such purpose. In addition, each Party hereby irrevocably
waives, to the fullest extent permitted by law, any objection which it may now
or hereafter have to the laying of venue of any action or proceeding arising
out of or relating to this Agreement or any judgment entered by any court in
respect thereof brought in any state or federal court sitting in the city of
Tampa, Florida and further irrevocably waives any claim that any action or
proceeding brought in any such court has been brought in an inconvenient forum.

     14. Waiver of Jury Trial. IN ANY ACTION OR PROCEEDING ARISING
HEREFROM, THE PARTIES HERETO CONSENT TO TRIAL WITHOUT A JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM BROUGHT BY ANY PARTY HERETO AGAINST THE OTHER OR
THEIR SUCCESSORS IN RESPECT OF ANY MATTER ARISING OUT OF OR IN CONNECTION WITH
THIS AGREEMENT, REGARDLESS OF THE FORM OF ACTION OR PROCEEDING.

     15. Counterparts. This Agreement may be executed in any number of
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.

[SIGNATURE PAGE FOLLOWS]

5

 

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.

	 	 	 	 	 
	 	WELLCARE HEALTH PLANS, INC.

 	 
	 	By   /s/ Paul L. Behrens
 	 
	 	Name:  	Paul L. Behrens 	 
	 	Title:  	Senior Vice President and
Chief Financial Officer 	 
	 
	 	WCG HEALTH MANAGEMENT, INC.

 	 
	 	By   /s/ Paul L. Behrens
 	 
	 	Name:  	Paul L. Behrens 	 
	 	Title:  	Senior Vice President and
Chief Financial Officer 	 
	 
	 	 	 
	 	                                                    /s/ Kiran C. Patel
 	 
	 	Kiran C. Patel, as Stockholder 	 
	 	Representative

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