Document:

Exhibit
10.169

 

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
Health Source 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 *** 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.

 

PacifiCare shall
conduct combined settlements on a quarterly basis, inclusive of a reserve

 

Prospect Health Source Medical Group

Effective January 1, 2002

 

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

 

1

 

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.

 

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 POINT-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:

  	
   

  	
  12/7/01

  	
   

  
						

 

3

 

	
   

  	
  PROSPECT HEALTH SOURCE 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 1

DEFINITIONS

 

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

 

1.1                                 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 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

  	
   

  
	
  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

  	
   

  

 

6

 

	
  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.

 

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.

 

7

 

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

 

3.3.2                        CHIP Budget.  The CHIP Budget for Commercial Plan Members
shall be *** 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 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,

 

8

 

(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 panties
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 $1.50 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 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.

 

9

 

3.4.2                        PIP Budget shall
equal eighty percent (80%) of the premium received by PacifiCare for Outpatient
Pharmacy Supplemental Benefits for Commercial Health Plan Members plus
thirty-one cents ($0.31) 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, Fifty percent (50%) 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 One Dollar
($1.00) 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 HEALTH SOURCE 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.

 

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

 

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

 

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

 

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

 

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

 

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
ISL Premium.  In calculating
Capitation Payments due to the Medical Group for Commercial POS Plan Members,
PacifiCare shall deduct *** 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 *** 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 one
thousand five hundred dollars ($1,500) per acute inpatient day, four hundred
dollars ($400) per skilled nursing facility day, and zero dollars ($0) 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 one hundred percent (100%) 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 fifty percent (50%) 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, fifty percent (50%) 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 HEALTH SOURCE 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 (Pan 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.l                                    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 *** of the Secure Horizons Revenue per
Secure Horizons Member per month, plus *** 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 fifty percent (50%) of the Cost of Care for amounts in
excess of the Reinsurance Deductible but less than two hundred fifty thousand
dollars ($250,000) and twenty percent (20%) of the Cost of Care for amounts in
excess of two hundred fifty thousand dollars ($250,000).

 

3.3.2                        SHIP Budget.
The SHIP Budget for Secure Horizons Members shall be fifty one percent (51.0%)
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:

 

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

 

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

 

3.4.3                        MSBP Surplus.
In the event the MSBP Expense is less than the MSBP Budget, 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 Two Dollars ($2.00) 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 HEALTH SOURCE 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 A OP - Fac

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Chemical Dependency (Detox) - IP
  & OP - Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Chemical Dependency (Rehab) - IP
  - Fac - CO

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Chemical Dependency (Rehab) - IP
  - Fac - SH

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Chemical Dependency (Rehab) - IP - Prof - CO

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Chemical Dependency (Rehab) - IP - Prof - SH

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Chemical Dependency (Rehab) - OP - Fac - CO

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Chemical Dependency (Rehab) - OP
  - Fac - SH

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Chemical Dependency (Rehab) - OP - Prof - CO

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Chemical Dependency (Rehab) - OP
  - Prof - SH

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

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

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Chemotherapy - IP - Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Chiropractic - Medical - OP -
  Fac & Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Chiropractic - Supplemental - OP - Fac & Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Circumcision - OP - Fac & Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Diagnostic Tests - OP - Fac & Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  DME - IP

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

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

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  

 

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

 

23

 

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

 

	
  Service
  Description

  	
   

  	
  Medical

  Group

  	
   

  	
  Hospital

  Incentive

  Program

  	
   

  	
  PacifiCare

  	
   

  
	
  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 A88 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.

 

24

 

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

 

	
  Service
  Description

  	
   

  	
  Medical

  Group

  	
   

  	
  Hospital

  Incentive

  Program

  	
   

  	
  PacifiCare

  	
   

  
	
  Mental Health - IP and OP - Prof - CO

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Mental Health - IP and OP - Prof- SH

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Observation Room - OP - Fac

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

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

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

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

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Out of Area - IP & OP - Fac

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Out of Area - IP & OP - Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Outpatient Surgery - OP - Fac

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Outpatient Surgery - OP - Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

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

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  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
10.170

 

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 Health Source 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; (111)
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

 

3

 

the
rate set forth in the applicable subcontract. To the extent Medical Group’s
subcontracts do not comply with the requirements of this Section 2.4.5 as
of the date this Agreement is executed and delivered, Medical Group shall cause
its subcontracts to be amended to comply with the forgoing by 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 fifty percent (50%) of 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 in this paragraph, achieve a current ratio of 1.0 to 1.0 as determined
by GAAP and maintains that

 

4

 

current
ratio for twelve (12) consecutive months, then the Letter of Credit shall 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

 

5

 

satisfies
all its financial obligations under this Agreement (“the Letter of Credit
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

 

6

 

Copayments,
coinsurance, and/or deductibles, as payment in full for such services or treatment.
The provisions of Section 8.2 [No Billing of Members (Member Hold Harmless
Provision)] shall be binding upon Medical Group regardless of whether
PacifiCare or another capitated Participating Provider is at financial risk for
services provided.

 

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

 

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

 

ARTICLE 3

ADMINISTRATIVE
DUTIES OF PACIFICARE

 

3.2         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,

 

7

 

autologous
hemopoetic stem cell transplantation and allogeneic hemopoetic stem cell
transplantation as described in the applicable Subscriber Agreement and
Evidence of Coverage.

 

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

 

(c)                                  “NPTN Members” are:

 

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

 

8

 

financial
responsibility for specific Covered Services, drugs and agents (to include
injectable drugs and adjuncts) that were the previous responsibility of the
Medical Group.

 

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

 

5.16                           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

 

10

 

monthly
incentive withhold shall be two dollars and forty-five cents ($2.45) per Member
per month for the PacifiCare Commercial Health Plan. PacifiCare, in its sole
discretion, shall prospectively adjust the withhold based on Medical Group’s
experience under the combined incentive programs at the time of the program
settlements described below. The monthly incentive withhold shall not exceed
the amount 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 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

 

11

 

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 will pay Cost of
Care, less the Medical Group’s ISL Coinsurance amount, subject to the Medical
Group’s compliance with the procedures set forth in the Provider Manual and the
provisions of this Section set forth below.

 

5.5.4                        Notification of ISL and Reinsurance Claims. Medical Group shall provide written
notification to PacifiCare when Medical Group becomes aware that claims for
Medical Group Services or Hospital Services provided to Medical Group Member(s)
equal fifty percent (50%) of the ISL Deductible or fifty percent (50%) of the
Reinsurance Deductible, respectively. Such written notification shall be
provided to PacifiCare no later than the fifteenth (15th) day of the month
following the month in which such threshold is reached. Medical Group
acknowledges and agrees that if Medical Group fails to provide the written
notice required by this Section within the time frame specified in this
Section, Medical Group shall be financially responsible for ten percent (10%)
of all Medical Group Services or ten percent (10%) of all Hospital Services
provided to the Medical Group Member(s) in excess of the ISL Deductible or
Reinsurance Deductible, as applicable, which amount shall be in addition to the
ISL Coinsurance or Reinsurance Coinsurance, as applicable.

 

5.7                                 Cost of Care. Certain provisions of this Agreement require that Medical Group
provide or arrange health care services which are not covered by Capitation Payments
at Cost of Care and certain provisions of this Agreement require that Covered
Services be valued at Cost of Care. For purposes of this Agreement, “Cost of
Care” shall be calculated using the lesser of billed charges or in accordance
with the PacifiCare Fee Schedule. The PacifiCare Fee Schedule shall be
based upon the following: (i) for professional services that are included under
the Medicare RBRVS Fee Schedule, reimbursement shall be one hundred percent
(100%) of Medicare’s geographically adjusted fee schedule according to the
Medicare payment locality the provider resides in; (ii) for all other health
care services (other than inpatient and outpatient Hospital Services) that are
not included 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 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

 

12

 

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 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

 

13

 

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.

 

5.17                           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.

 

5.18                           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.

 

5.19                           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.

 

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

 

14

 

behalf
of payor. PacifiCare shall not be responsible or liable for any claims
decisions or for any payment of claims by payors.

 

5.20                           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 5.20 shall result in the request being denied by PacifiCare, and
no further action may be taken by Medical Group.

 

5.21                           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 5.21 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 either 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:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MEDICAL GROUP

  
	
   

  	
  PROSPECT HEALTH SOURCE
  MEDICAL

  
	
   

  	
  GROUP

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
						

 

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                                 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.

 

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

 

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

 

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

 

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

 

ARTICLE 2

DUTIES OF
MEDICAL GROUP

 

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

 

2.2                                 Compliance with OPM Agreement. Medical Group shall comply with all
requirements in the OPM Agreement which are applicable to Medical Group as a
subcontractor of PacifiCare as a result of this Agreement. Without limiting the
foregoing, Medical Group shall ensure that all provisions of the OPM Agreement which are applicable to Medical
Group’s Participating

 

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

 

3.1                                 Age/Gender/Benefit Adjusted Commercial
Capitation. Capitation
Payments for Commercial Plan Members shall be made based upon a per Member per
month base capitation rate (“Base Capitation Rate”) adjusted to reflect the
Medical Group Members’ age, gender, and benefit plan participation.  Effective January 1, 2003, the Base
Capitation Rate shall be *** per Commercial Plan Member per month.  Effective January 1, 2004, the Base
Capitation Rate shall be *** per Commercial Plan Member per month. Age/gender
adjustment factors are actuarially determined and are listed below.  Benefit adjustment factors are actuarially
determined by PacifiCare and may take into consideration variations in benefit
plan types, Copayment and coinsurance levels. PacifiCare may change its benefit
adjustment factors as needed to support the differing plan types that it
offers. On an annual basis, PacifiCare may modify the benefit adjustment
factors based on actuarially determined changes. The Standard Service
Capitation Amount will vary during subsequent months as a result of changes in
the age, gender, and benefit plan participation of the Medical Group’s Members
for the applicable month. The total monthly Capitation Payment shall also be
adjusted in the manner set forth in Article 5 of the Base Agreement.

 

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

 

	
  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

  	
   

  

 

23

 

	
  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.

 

(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 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
               
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

 

24

 

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. 
Effective January 1, 2004, the Base Rate shall be *** per
Commercial Plan Member per month. Age/gender adjustment factors are actuarially
determined by PacifiCare and are listed below. 
Benefit adjustment factors are actuarially determined by PacifiCare and
take into consideration variations in benefit plan types, Copayment and
coinsurance levels. PacifiCare may change its benefit adjustment factors as
needed to support the differing plan types that it offers. On an annual basis,
PacifiCare may modify the benefit adjustment factors based on actuarially
determined changes.  The 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

  	
   

  

 

25

 

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 *** 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.

 

26

 

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.

 

27

 

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 HEALTH SOURCE
  MEDICAL

  
	
   

  	
  GROUP

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Peter G. Goll

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  Senior Vice President

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
  12-10-02

  	
   

  
						

 

28

 

PRODUCT ATTACHMENT B

 

PACIFICARE COMMERCIAL POINT-OF-SERVICE PLAN

 

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

 

ARTICLE 1

DEFINITIONS

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

29

 

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 HEALTH SOURCE
  MEDICAL GROUP

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Peter G. Goll

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  Senior Vice President

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
  12-10-02

  	
   

  
						

 

30

 

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 premium taxes.

 

ARTICLE 2

DUTIES OF MEDICAL GROUP

 

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

 

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

 

31

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

2.7                                 Non-Discrimination. Medical Group understands that CMS requires
compliance with the provisions of this Section as a condition for
participation in the Secure Horizons Health Plan.  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

 

32

 

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 *** of the Secure Horizons Revenue per Secure
Horizons Member per month, plus *** per month 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 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 *** 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 shall begin with the January 2003 Standard Service
Capitation Payment.  This provision will
be in effect for the term of this Agreement.

 

33

 

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%) 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 opting out of the ISL Program, the
above amounts and percentages will reflect “zero.” In such event, Medical Group
shall be required to obtain ISL coverage from a third-party insurance carrier
in accordance with Section 5.5.3 of the Base Agreement.

 

3.3                                 Secure Horizons Hospital Incentive Program. Medical Group and Hospital shall establish
and administer an annual Secure Horizons Hospital Incentive Program for the
Secure Horizons Plan (the “SHIP”). The SHIP shall be designed to provide an
incentive for efficient and effective use of Hospital Services, and shall be
consistent with this Agreement and with State and Federal Law. A copy of the
SHIP is included in the Exhibits and incorporated herein. Medical Group shall
provide PacifiCare with a copy of any and all revisions to the SHIP, which shall
be deemed incorporated into this Agreement; copies of any and all reports and
payment schedules prepared by Medical Group or Hospital relating to the SHIP
and evidence of stop-loss reinsurance obtained pertaining to the SHIP (which
insurance must be approved, in writing, by PacifiCare). PacifiCare reserves the
right to require that the SHIP be modified from time to time to comply with
this Agreement and State and Federal Law. Without limiting the foregoing, the
SHIP shall provide that in the event of a deficit under the SHIP which exceeds
any established withhold, Medical Group shall not be responsible for
reimbursing Hospital or PacifiCare for such deficit nor shall PacifiCare offset
such deficit against Medical Group’s Capitation Payments due under this
Agreement.

 

If
PacifiCare provides reinsurance protection for the SHIP, such reinsurance shall
be obtained in accordance with PacifiCare’s Reinsurance Program then in effect
and elections for such Reinsurance Program shall be made by Hospital, in writing,
with written notice to Medical Group. Hospital shall not change its Reinsurance
Program elections without the written consent of Medical Group. Reinsurance
Premiums shall be paid by Hospital and PacifiCare may deduct such Reinsurance
Premiums from Hospital’s Capitation Payments.

 

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.

 

34

 

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 HEALTH SOURCE
  MEDICAL GROUP

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Peter G. Goll

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  Senior Vice President

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
  12-10-02

  	
   

  
						

 

35

 

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
Health Source

 

Hospital(s):

Midway
Hospital Medical Center

Century
City Hospital

Brotman
Medical Center

 

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.

 

36

 

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.

 

37

 

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 healthcare 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 approximately

  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 for 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

  

 

38

 

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

  	
   

  	
  •                  Daily submission of patient census by
  admission and discharge and Level of Care

  •                  Monthly submission of Bed Days per thousand
  members per year

  	
   

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

  •                  Annual onsite assessment to determine
  ability to perform function

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  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

  

 

39

 

MEDICAL
MANAGEMENT DELEGATION GRID

 

	
  Function

  	
   

  	
  Delegation

  Status

  	
   

  	
  Provider Group Responsibility/

  Performance Measure

  	
   

  	
  Reporting

  Frequency

  	
   

  	
  Pacific Oversight

  
	
  Denials

  Professional 

   

  Institutional (Administrative/Facility Denials)

  	
   

  	
  

  ý
  Delegated

  o Not delegated

  o
  Delegated

  ý Not delegated

  	
   

  	
  For Denials of 1 services PG must:

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

  •      Follow nationally
  recognized medical necessity criteria

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

  	
   

  	
  Weekly submission of denial logs.

  	
   

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

  •      Annual onsite assessment
  to determine ability to perform function.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  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, when 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), 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
delegated status.

 

40

 

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 of 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.

 

41

 

CREDENTIALING
DELEGATION GRID

 

	
  Function

  	
   

  	
  Delegation

  Status

  	
   

  	
  Provider Group Responsibility/

  Performance Measures

  	
   

  	
  Reporting

  Frequency

  	
   

  	
  PacifiCare

  Oversight

  
	
  Credentialing Program description and/or Policies
  and Procedures (P&Ps)

  	
   

  	
  ý
  Delegated

  o Not delegated

  	
   

  	
  Full Compliance with NCQA Standards:

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

  •      Define criteria and
  verification of criteria

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

  •      Describe the process to
  delegate credentialing/ recredentialing

  •      Describe right of
  practitioner to review information.

  •      Develop process to notify
  practitioner of discrepancies.

  •      Include practitioner’s
  right to correct erroneous information.

  •      Ensure confidentiality.

  •      Define Medical Director responsibilities
  and participation.

  	
   

  	
  Submit Credentialing Program annually.

   

  Revised credentialing policies and 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 Plans(s) for elements of non-compliance.

  •      Annual audit conducted of

  

 

42

 

	
  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 disciplanary activity.

  •      Current malpractice
  insurance coverage, including dates & coverage amount

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

  •      Signed within 180 days of
  Committee approval date.

  	
   

  	
  Immediate submission of any changes to application.

  	
   

  	
  •      Initial onsite assessment.

  •      Annual oversight
  assessment.

  •      Annual PacifiCare
  Committee approval.

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

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

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

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

  	
   

  	
  ý
  Delegated

  o
  Not delegated

  	
   

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

  •      Information from NPDB

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

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

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

  •      DDSs: NPDB or State Board
  of Dental Examiners

  •      DPMs: State Board of
  Podiatric Examiners or Federation of 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

  

 

43

 

	
  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

  

 

44

 

	
  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 or the Federation of Chiropractic Licensing Boards

  •      DDSs: NPDB or State Board
  of Dentals 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

  

 

45

 

	
  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 or State Board of Licensure or Certification

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

  •                  NPDB
  or Medicare/Medicaid sanction report

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  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 held 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 Plan(s) for elements of non-compliance

  •         Annual
  PacifiCare Committee approval

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Process for Peer Review/Disciplinary Action

  	
   

  	
  ý
  Delegated

  o
  Not delegated

  	
   

  	
  Full Compliance with NCQA Standards.

  P&Ps for altering the conditions of the
  practitioner’s participation with PacifiCare

  	
   

  	
  New P&Ps submitted at least annually

  	
   

  	
  •        Initial
  onsite assessment

  •        Annual
  oversight

  

 

46

 

	
  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 to
  appropriate authorities.

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

   

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

  	
   

  	
  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, polices and
  procedures, and ongoing evaluation of performance.

  

 

47

 

	
  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
  evolution

  •         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 & accreditations 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.

 

48

 

PacifiCare will perform audits 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.

 

49

 

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.

  

 

50

 

	
  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 expenses 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 levels 

  Customer Service capabilities

  Past experience for claims resolution

  Staff available to answer claims questions during normal hours of operation

  	
   

  	
  N/A

  	
   

  	
  Initial onsite assessment utilizing approved
  oversight tool.

  Annual oversight assessment utilizing approved
  oversight tool.

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

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

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Audit Reporting

  	
   

  	
  ý
  Delegated

  

  o Not delegated

  	
   

  	
  Appropriate and adequate audit reporting available
  including:

  •  Reports provided for audit

  	
   

  	
  As needed for audits

  	
   

  	
  Initial onsite assessment utilizing approved
  oversight tool.

  Annual oversight assessment utilizing

  

 

51

 

	
  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 Data

  	
   

  	
  ý
  Delegated

  

  o Not delegated

  	
   

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

  	
   

  	
  Monthly

  	
   

  	
  Initial onsite assessment utilizing approved
  oversight tool.

  Annual oversight assessment utilizing approved
  oversight tool.

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

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

  

 

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

 

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

 

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

 

52

 

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 date 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 HEALTH SOURCE MEDICAL GROUP

  
	
   

  
	
  By:

  	
  /s/ Peter G. Goll

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
  Senior Vice President

  	
   

  
	
   

  	
   

  	
   

  
	
  Date:

  	
  12-10-02

  	
   

  
					

 

53

 

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 HEALTH SOURCE 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/ Brian Jeffrey

  	
   

  
	
   

  	
   

  	
   

  
	
  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

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Division of Financial Responsibility

  	
   

  	
  /s/ BJ

  	
   

  	
  /s/ PG

  

 

54

 

PACIFICARE
OF CALIFORNIA

 

MEDICAL GROUP/IPA
SERVICES AGREEMENT

(PROFESSIONAL CAPITATION)

 

EXHIBIT 4

 

DIVISION OF FINANCIAL
RESPONSIBILITY

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

 

The following matrix outlines the division of financial responsibility
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

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Chemotherapy - IP – Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Chiropractic - Medical - OP - Fac & Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Chiropractic - Supplemental  - OP – 
  Fac & Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Circumcision - OP - 
  Fac & Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Diagnostic Tests - OP -  Fac & Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  DME – IP

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

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

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  

 

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

 

55

 

	
  Service
  Description

  	
   

  	
  Medical

  Group

  	
   

  	
  Hospital

  Incentive

  Program

  	
   

  	
  PacifiCare

  	
   

  
	
  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)

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  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 - 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)

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Mental Health –
  IP and OP – Fac  – CO

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Mental Health -
  IP and OP - Fac - SH

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Mental Health -
  IP and OP – Prof - CO

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Mental Health -
  IP and OP - Prof - SH

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Observation Room - OP – Fac

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

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

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  

 

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

 

56

 

	
  Service
  Description

  	
   

  	
  Medical

  Group

  	
   

  	
  Hospital

  Incentive

  Program

  	
   

  	
  PacifiCare

  	
   

  
	
  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

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  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

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  

 

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

 

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.

 

57

 

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-Injectables on Attachment A –1 to add
new therapeutic drugs or therapeutic substitutes.  The SICOP does not cover all self-injectable drugs which might be
a covered benefit.

 

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

 

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

 

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

 

	
   

  	
  /s/ 

  	
  Medical Group elects not to participate in the
  SICOP.

  

 

58

 

 

59

 

2003
Self-Injectable Carve-Out Program

Procedures for Ordering

 

I.                                         Requesting an Injectable Medication

 

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

 

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

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

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

 

II.                                     Approved

 

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

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

 

III.                                 Denied

 

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

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

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

 

IV.                                 Education

 

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

 

V.                                     Delivery of product to patient

 

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

 

Fulfillment
Time

 

	
  Day and Time when an authorized

  prescription is received by Injectable

  Pharmacy Vendor **

  	
  Expected turn around time for delivery.

  

 

60

 

	
  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.

 

61

 

EXHIBIT 4,
ATTACHMENT A,

ATTACHMENT A-1

 

PacifiCare of
California

2003 Self-Injectable
Carve-out Program (SICOP)

 

 

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

 

Commercial:

Aranesp

Avonex

Betaserone

Copaxone

Enbrel

Epogen/Procrit

Fragmin

Growth Hormone

Innohep

Kineret

Leukine

Lovenox

Neulasta

Neumega

Neupogen

Peg Intron

Rebetron

Serostim

 

 

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

 

62

 

PACIFICARE OF CALIFORNIA

MEDICAL GROUP/IPA SERVICES AGREEMENT

 

EXHIBIT 4

ATTACHMENT B

 

 

THIS EXHIBIT 4,
ATTACHMENT B INTENTIONALLY LEFT BLANK

 

63

 

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, leukopheresis consultation, CT scan,
tissue typing, MRI.

 

64

 

•                  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.

 

65

 

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

 

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

 

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

 

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

 

•                                          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

 

66

 

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.

 

67

 

•                  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 necessary
services rendered to recipient for follow-up for up to 365 days post discharge.

 

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

 

•                  Transplant physician visits

 

•                  Laboratory
testing

 

•                  Radiology
exams

 

•                  Retransplantation

 

•                  Readmissions related to transplant
complications

 

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

 

68

 

•                  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.

 

69

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