Document:

EX-10.1

Contract with Eligible Medicare Advantage (MA) Organization Pursuant to

Sections 1851 through 1859 of the Social Security Act for the Operation

of a Medicare Advantage Coordinated Care Plan(s)

CONTRACT (# )

Between

Centers for Medicare & Medicaid Services (hereinafter referred to as CMS)

and

     

(hereinafter referred to as the MA Organization)

CMS and the MA Organization, an entity which has been determined to be an eligible Medicare

Advantage Organization by the Administrator of the Centers for Medicare & Medicaid Services

under 42 CFR 422.503, agree to the following for the purposes of sections 1851 through 1859 of

the Social Security Act (hereinafter referred to as the Act):

(NOTE: Citations indicated in brackets are placed in the text of this contract to note the

regulatory authority for certain contract provisions. All references to Part 422 are to 42 CFR

Part 422.)

You must check off AND initial each required Addendum type to reflect the

coverage offered under the H (or R) number associated with this contract

Addendum Type Initials

     Part D Addendum      

     Employer-Only MA-PD Addendum (800 Series)      

     Employer-Only MA Only Addendum (800 Series)      

     Variances/Waivers (Provided directly to      

Demonstration Organizations by CMS)

     Regional Preferred Provider Organization Addendum      

(Provided directly to RPPOs by CMS)

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Article I

Term of Contract

The term of this contract shall be from the date of signature by CMS’ authorized representative

through December 31, 2006, after which this contract may be renewed for successive one-year

periods in accordance with 42 CFR 422.505(c) and as discussed in Paragraph A in Article VII

below. [422.505]

This contract governs the respective rights and obligations of the parties as of the effective date

set forth above, and supersedes any prior agreements between the MA Organization and CMS as

of such date. MA organizations offering Part D also must execute an Addendum to the Medicare

Managed Care Contract Pursuant to Sections 1860D-1 through 1860D-42 of the Social Security

Act for the Operation of a Voluntary Medicare Prescription Drug Plan (hereafter the “Part D

Addendum”). For MA Organizations offering MA-PD plans, the Part D Addendum governs the

rights and obligations of the parties relating to the provision of Part D benefits, in accordance

with its terms, as of its effective date.

Article II

Coordinated Care Plan

A. The Medicare Advantage Organization agrees to operate one or more coordinated care plans

as defined in 42 CFR 422.4(a)(1)(iii)), including at least one MA-PD plan as required under 42

CFR 422.4(c), as described in its final Plan Benefit Package (PBP) bid submission (benefit and

price bid) proposal as approved by CMS and as attested to in the Medicare Advantage

Attestation of Benefit Plan and Price, and in compliance with the requirements of this contract

and applicable Federal statutes, regulations, and policies.

B. Except as provided in paragraph (C) of this Article, this contract is deemed to incorporate any

changes that are required by statute to be implemented during the term of the contract and any

regulations or policies implementing or interpreting such statutory provisions.

C. CMS will not implement, other than at the beginning of a calendar year, requirements under

42 CFR Part 422 that impose a new significant cost or burden on MA organizations or plans,

unless a different effective date is required by statute. [422.521]

Article III

Functions To Be Performed By Medicare Advantage Organization

A. PROVISION OF BENEFITS

1. The MA Organization agrees to provide enrollees in each of its MA plans the basic benefits as

required under §422.101 and, to the extent applicable, supplemental benefits under §422.102 and

as established in the MA Organization’s final benefit and price bid proposal as approved by

CMS and listed in the MA Organization Plan Attestation of Benefit Plan and Price, which is

attached to this contract. The MA Organization agrees to provide access to such benefits as

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required under subpart C in a manner consistent with professionally recognized standards of

health care and according to the access standards stated in §422.112.

2. The MA Organization agrees to provide post-hospital extended care services, should an MA

enrollee elect such coverage, through a skilled nursing home facility according to the

requirements of section 1852(l) of the Act and §422.133. A skilled nursing home facility is a

facility in which an MA enrollee resided at the time of admission to the hospital, a facility that

provides services through a continuing care retirement community, a facility in which the spouse

of the enrollee is residing at the time of the enrollee’s discharge from the hospital, or hospital,
or

wherever the enrollee resides immediately before admission for extended care services.

[422. 133; 422.504(a)(3)]

B. ENROLLMENT REQUIREMENTS

1. The MA Organization agrees to accept new enrollments, make enrollments effective, process

voluntary disenrollments, and limit involuntary disenrollments, as provided in subpart B of

part 422.

2. The MA Organization shall comply with the provisions of §422.110 concerning prohibitions

against discrimination in beneficiary enrollment, other than in enrolling eligible beneficiaries in
a

CMA-approved special needs plan that exclusively enrolls special needs individuals as consistent

with §§422.2, 422.4(a)(1)(iv) and 422.52.

[422.504(a)(2)]

C. BENEFICIARY PROTECTIONS

1. The MA Organization agrees to comply with all requirements in subpart M of part 422,

governing coverage determinations, grievances, and appeals. [422.504(a)(7)]

2. The MA Organization agrees to comply with the confidentiality and enrollee record accuracy

requirements in §422.118.

3. Beneficiary Financial Protections. The MA Organization agrees to comply with the following

requirements:

(a) Each MA Organization must adopt and maintain arrangements satisfactory to CMS to

protect its enrollees from incurring liability for payment of any fees that are the legal
obligation

of the MA Organization. To meet this requirement the MA Organization must—

(i) Ensure that all contractual or other written arrangements with providers prohibit the

Organization’s providers from holding any beneficiary enrollee liable for payment of any fees

that are the legal obligation of the MA Organization; and

(ii) Indemnify the beneficiary enrollee for payment of any fees that are the legal

obligation of the MA Organization for services furnished by providers that do not contract, or

that have not otherwise entered into an agreement with the MA Organization, to provide services

to the organization’s beneficiary enrollees. [422.504(g)(1)]

(b) The MA Organization must provide for continuation of enrollee health care benefits-

(i) For all enrollees, for the duration of the contract period for which CMS payments have

been made; and

(ii) For enrollees who are hospitalized on the date its contract with CMS terminates, or, in

the event of the MA Organization’s insolvency, through the date of discharge. [422.504(g)(2)]

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(c) In meeting the requirements of this section (C), other than the provider contract

requirements specified in paragraph (C)(3)(a) of this Article, the MA Organization may use—

(i) Contractual arrangements;

(ii) Insurance acceptable to CMS;

(iii) Financial reserves acceptable to CMS; or

(iv) Any other arrangement acceptable to CMS. [422.504(g)(3)]

D. PROVIDER PROTECTIONS

1. The MA Organization agrees to comply with all applicable provider requirements in 42 CFR

Part 422 Subpart E, including provider certification requirements, anti-discrimination

requirements, provider participation and consultation requirements, the prohibition on

interference with provider advice, limits on provider indemnification, rules governing payments

to providers, and limits on physician incentive plans. [422.504(a)(6)]

2. Prompt Payment.

(a) The MA Organization must pay 95 percent of “clean claims” within 30 days of receipt

if they are claims for covered services that are not furnished under a written agreement between

the organization and the provider.

(i) The MA Organization must pay interest on clean claims that are not paid within 30

days in accordance with sections 1816(c)(2) and 1842(c)(2) of the Act.

(ii) All other claims from non-contracted providers must be paid or denied within 60

calendar days from the date of the request. [422.520(a)]

(b) Contracts or other written agreements between the MA Organization and its providers

must contain a prompt payment provision, the terms of which are developed and agreed to by

both the MA Organization and the relevant provider. [422.520(b)]

(c) If CMS determines, after giving notice and opportunity for hearing, that the MA

Organization has failed to make payments in accordance with subparagraph (2)(a) of this section,

CMS may provide—

(i) For direct payment of the sums owed to providers; and

(ii) For appropriate reduction in the amounts that would otherwise be paid to the MA

Organization, to reflect the amounts of the direct payments and the cost of making those

payments. [422.520(c)]

E. QUALITY IMPROVEMENT PROGRAM

1. The MA Organization agrees to operate, for each plan that it offers, an ongoing quality

improvement program as stated in accordance with Section 1852(e) of the Social Security Act

and 42 CFR 422.152.

2. Chronic Care Improvement Program

(a) Each MA organization (other than MA private-fee-for-service plans) must have a

chronic care improvement program and must establish criteria for participation in the program.

The CCIP must have a method for identifying enrollees with multiple or sufficiently severe

chronic conditions who meet the criteria for participation in the program and a mechanism for

monitoring enrollees’ participation in the program.

(b) Plans have flexibility to choose the design of their program; however, in addition to

meeting the requirements specified above, the CCIP selected must be relevant to the plan’s MA

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population. MA organizations are required to submit annual reports on their CCIP program to

CMS.

3. Performance Measurement and Reporting: The MA Organization shall measure performance

under its MA plans using standard measures required by CMS, and report (at the organization

level) its performance to CMS. The standard measures required by CMS during the term of this

contract will be uniform data collection and reporting instruments, to include the Health Plan and

Employer Data Information Set (HEDIS), Consumer Assessment of Health Plan Satisfaction

(CAHPS) survey, and Health Outcomes Survey (HOS). These measures will address clinical

areas, including effectiveness of care, enrollee perception of care and use of services; and
nonclinical

areas including access to and availability of services, appeals and grievances, and

organizational characteristics. [422.152(b)(1), (e)]

4. Utilization Review:

(a) An MA Organization for an MA coordinated care plan must use written protocols for

utilization review and policies and procedures must reflect current standards of medical practice

in processing requests for initial or continued authorization of services and have in effect

mechanisms to detect both underutilization and over utilization of services. [422.152(b)]

(b) For MA regional preferred provider organizations (RPPOs) and MA local preferred

provider organizations (PPOs) that are offered by an organization that is not licensed or

organized under State law as an HMOs, if the MA Organization uses written protocols for

utilization review, those policies and procedures must reflect current standards of medical

practice in processing requests for initial or continued authorization of services and include

mechanisms to evaluate utilization of services and to inform enrollees and providers of services

of the results of the evaluation. [422.152(e)] .

5. Information Systems:

(a) The MA Organization must:

(i) Maintain a health information system that collects, analyzes and integrates the data

necessary to implement its quality improvement program;

(ii) Ensure that the information entered into the system (particularly that received from

providers) is reliable and complete;

(iii) Make all collected information available to CMS. [422.152(f)(1)]

6. External Review

The MA Organization will comply with any requests by Quality Improvement Organizations to

review the MA Organization’s medical records in connection with appeals of discharges from

hospitals, skilled nursing facilities, and home health agencies.

F. COMPLIANCE PLAN

The MA Organization agrees to implement a compliance plan in accordance with the

requirements of §422.503(b)(4)(vi). [422.503(b)(4)(vi)]

G. COMPLIANCE DEEMED ON THE BASIS OF ACCREDITATION

CMS may deem the MA Organization to have met the quality improvement requirements of

§1852(e) of the Act and §422.152, the confidentiality and accuracy of enrollee records

requirements of §1852(h) of the Act and §422.118, the anti-discrimination requirements of

§1852(b) of the Act and §422.110, the access to services requirements of §1852(d) of the Act

and §422.112, and the advance directives requirements of §1852(i) of the Act and §422.128, the

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provider participation requirements of §1852(j) of the Act and 42 CFR Part 422, Subpart F, and

the applicable requirements described in §423.165, if the MA Organization is fully accredited

(and periodically reaccredited) by a private, national accreditation organization approved by

CMS and the accreditation organization used the standards approved by CMS for the purposes of

assessing the MA Organization’s compliance with Medicare requirements. The provisions of

§422.156 shall govern the MA Organization’s use of deemed status to meet MA program

requirements.

H. PROGRAM INTEGRITY

1. The MA Organization agrees to provide notice based on best knowledge, information, and

belief to CMS of any integrity items related to payments from governmental entities, both federal

and state, for healthcare or prescription drug services. These items include any investigations,

legal actions or matters subject to arbitration brought involving the MA Organization (or MA

Organization’s firm if applicable) and its subcontractors (excluding contracted network

providers), including any key management or executive staff, or any major shareholders (5% or

more), by a government agency (state or federal) on matters relating to payments from

governmental entities, both federal and state, for healthcare and/or prescription drug services. In

providing the notice, the sponsor shall keep the government informed of when the integrity item

is initiated and when it is closed. Notice should be provided of the details concerning any

resolution and monetary payments as well as any settlement agreements or corporate integrity

agreements.

2. The MA Organization agrees to provide notice based on best knowledge, information, and

belief to CMS in the event the MA Organization or any of its subcontractors is criminally

convicted or has a civil judgment entered against it for fraudulent activities or is sanctioned

under any Federal program involving the provision of health care or prescription drug services.

I. MARKETING

1. The MA Organization may not distribute any marketing materials, as defined in 42 CFR

422.80(b) and in the Marketing Materials Guidelines for Medicare Advantage-Prescription Drug

Plans and Prescription Drug Plans (Medicare Marketing Guidelines), unless they have been filed

with and not disapproved by CMS in accordance with §422.80. The file and use process set out

at §422.80(a)(2) must be used, unless the MA organization notifies CMS that it will not use this

process.

2. CMS and the MA Organization shall agree upon language setting forth the benefits,

exclusions and other language of the Plan. The MA Organization bears full responsibility for the

accuracy of its marketing materials. CMS, in its sole discretion, may order the MA Organization

to print and distribute the agreed upon marketing materials, in a format approved by CMS. The

MA Organization must disclose the information to each enrollee electing a plan as outlined in 42

CFR 422.111.

3. The MA Organization agrees that any advertising material, including that labeled promotional

material, marketing materials, or supplemental literature, shall be truthful and not misleading.

All marketing materials must include the Contract number. All membership identification cards

must include the Contract number on the front of the card.

4. The MA Organization must comply with the Medicare Marketing Guidelines, as well as all

applicable statutes and regulations, including and without limitation Section 1851(h) of the Act

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and 42 CFR §§422.80, 422.111 and 423.50. Failure to comply may result in sanctions as

provided in 42 CFR Part 422 Subpart O.

Article IV

CMS Payment to MA Organization

A. The MA Organization agrees to develop its annual benefit and price bid proposal and submit

to CMS all required information on premiums, benefits, and cost sharing, as required under 42

CFR Part 422 Subpart F. [422.504(a)(10)]

B. Methodology. CMS agrees to pay the MA Organization under this contract in accordance

with the provisions of section 1853 of the Act and 42 CFR Part 422 Subpart G. [422.504(a)(9)]

C. Attestation of payment data (Attachments A, B, and C).

As a condition for receiving a monthly payment under paragraph B of this article, and 42 CFR

Part 422 Subpart G, the MA Organization agrees that its chief executive officer (CEO), chief

financial officer (CFO), or an individual delegated with the authority to sign on behalf of one of

these officers, and who reports directly to such officer, must request payment under the contract

on the forms attached hereto as Attachment A (enrollment attestation) and Attachment B (risk

adjustment data) which attest to (based on best knowledge, information and belief, as of the date

specified on the attestation form) the accuracy, completeness, and truthfulness of the data

identified on these attachments. The Medicare Advantage Plan Attestation of Benefit Plan and

Price must be signed and attached to the executed version of this contract.

1. Attachment A requires that the CEO, CFO, or an individual delegated with the authority to

sign on behalf of one of these officers, and who reports directly to such officer, must attest
based

on best knowledge, information, and belief that each enrollee for whom the MA Organization is

requesting payment is validly enrolled, or was validly enrolled during the period for which

payment is requested, in an MA plan offered by the MA Organization. The MA Organization

shall submit completed enrollment attestation forms to CMS, or its contractor, on a monthly

basis. (NOTE: The forms included as attachments to this contract are for reference only. CMS

will provide instructions for the completion and submission of the forms in separate documents.

MA Organizations should not take any action on the forms until appropriate CMS instructions

become available.)

2. Attachment B requires that the CEO, CFO, or an individual delegated with the authority to

sign on behalf of one of these officers, and who reports directly to such officer, must attest to

(based on best knowledge, information and belief, as of the date specified on the attestation

form) that the risk adjustment data it submits to CMS under §422.310 are accurate, complete, and

truthful. The MA Organization shall make annual attestations to this effect for risk adjustment

data on Attachment B and according to a schedule to be published by CMS. If such risk

adjustment data are generated by a related entity, contractor, or subcontractor of an MA

Organization, such entity, contractor, or subcontractor must similarly attest to (based on best

knowledge, information, and belief, as of the date specified on the attestation form) the accuracy,

completeness, and truthfulness of the data. [422.504(l)]

3. The Medicare Advantage Plan Attestation of Benefit Plan and Price (which is attached hereto_

requires that the CEO, CFO, or an individual delegated with the authority to sign on behalf of

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one of these officers, and who reports directly to such officer, must attest (based on best

knowledge, information and belief, as of the date specified on the attestation form) that the

information and documentation comprising the bid submission proposal is accurate, complete,

and truthful and fully conforms to the Bid Form and Plan Benefit Package requirements; and that

the benefits described in the CMS-approved proposal bid submission agree with the benefit

package the MA Organization will offer during the period covered by the proposal bid

submission. This document is being sent separately to the MA Organization and must be signed

and attached to the executed version of this contract, and is incorporated herein by reference.

[422.502(l)]

Article V

MA Organization Relationship with Related Entities, Contractors, and Subcontractors

A. Notwithstanding any relationship(s) that the MA Organization may have with related

entities, contractors, or subcontractors, the MA Organization maintains full responsibility for

adhering to and otherwise fully complying with all terms and conditions of its contract with

CMS. [422.504(i)(1)]

B. The MA Organization agrees to require all related entities, contractors, or subcontractors to

agree that—

(1) HHS, the Comptroller General, or their designees have the right to inspect, evaluate,

and audit any pertinent contracts, books, documents, papers, and records of the related entity(s),

contractor(s), or subcontractor(s) involving transactions related to this contract; and

(2) HHS, the Comptroller General, or their designees have the right to inspect, evaluate,

and audit any pertinent information for any particular contract period for 10 years from the final

date of the contract period or from the date of completion of any audit, whichever is later.

[422.504(i)(2)]

C. The MA Organization agrees that all contracts or written arrangements into which the MA

Organization enters with providers, related entities, contractors, or subcontractors (first tier
and

downstream entities) shall contain the following elements:

(1) Enrollee protection provisions that provide—

(a) Consistent with Article III(C), arrangements that prohibit providers from holding an

enrollee liable for payment of any fees that are the legal obligation of the MA Organization; and

(b) Consistent with Article III(C), provision for the continuation of benefits.

(2) Accountability provisions that indicate that the MA Organization may only delegate

activities or functions to a provider, related entity, contractor, or subcontractor in a manner

consistent with requirements set forth at paragraph D of this article.

(3) A provision requiring that any services or other activity performed by a related entity,

contractor or subcontractor in accordance with a contract or written agreement between the

related entity, contractor, or subcontractor and the MA Organization will be consistent and

comply with the MA Organization’s contractual obligations to CMS.

[422.504(i)(3)]

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D. If any of the MA Organization’s activities or responsibilities under this contract with CMS is

delegated to other parties, the following requirements apply to any related entity, contractor,

subcontractor, or provider:

(1) Written arrangements must specify delegated activities and reporting responsibilities.

(2) Written arrangements must either provide for revocation of the delegation activities

and reporting requirements or specify other remedies in instances where CMS or the MA

Organization determine that such parties have not performed satisfactorily.

(3) Written arrangements must specify that the performance of the parties is monitored by

the MA Organization on an ongoing basis.

(4) Written arrangements must specify that either—

(a) The credentials of medical professionals affiliated with the party or parties will be

either reviewed by the MA Organization; or

(b) The credentialing process will be reviewed and approved by the MA Organization

and the MA Organization must audit the credentialing process on an ongoing basis.

(5) All contracts or written arrangements must specify that the related entity, contractor,

or subcontractor must comply with all applicable Medicare laws, regulations, and CMS

instructions.

[422.504(i)(4)]

E. If the MA Organization delegates selection of the providers, contractors, or subcontractors to

another organization, the MA Organization’s written arrangements with that organization must

state that the MA Organization retains the right to approve, suspend, or terminate any such

arrangement. [422.504(i)(5)]

F. As of the date of this contract and throughout its term, the MA Organization

(1) Agrees that any physician incentive plan it operates meets the requirements of

§422.208, and

(2) Has assured that all physicians and physician groups that the MA Organization’s

physician incentive plan places at substantial financial risk have adequate stop-loss protection in

accordance with §422.208(f). [422.208]

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Article VI

Records Requirements

A. MAINTENANCE OF RECORDS

1. The MA Organization agrees to maintain for 10 years books, records, documents, and other

evidence of accounting procedures and practices that—

(a) Are sufficient to do the following:

(i) Accommodate periodic auditing of the financial records (including data related to

Medicare utilization, costs, and computation of the benefit and price bid) of the MA

Organization.

(ii) Enable CMS to inspect or otherwise evaluate the quality, appropriateness and

timeliness of services performed under the contract, and the facilities of the MA Organization.

(iii) Enable CMS to audit and inspect any books and records of the MA Organization that

pertain to the ability of the organization to bear the risk of potential financial losses, or to

services performed or determinations of amounts payable under the contract.

(iv) Properly reflect all direct and indirect costs claimed to have been incurred and used

in the preparation of the benefit and price bid proposal.

(v) Establish component rates of the benefit and price bid for determining additional and

supplementary benefits.

(vi) Determine the rates utilized in setting premiums for State insurance agency purposes

and for other government and private purchasers; and

(b) Include at least records of the following:

(i) Ownership and operation of the MA Organization’s financial, medical, and other

record keeping systems.

(ii) Financial statements for the current contract period and six prior periods.

(iii) Federal income tax or informational returns for the current contract period and six

prior periods.

(iv) Asset acquisition, lease, sale, or other action.

(v) Agreements, contracts (including, but not limited to, with related or unrelated

prescription drug benefit managers) and subcontracts.

(vi) Franchise, marketing, and management agreements.

(vii) Schedules of charges for the MA Organization’s fee-for-service patients.

(viii) Matters pertaining to costs of operations.

(ix) Amounts of income received, by source and payment.

(x) Cash flow statements.

(xi) Any financial reports filed with other Federal programs or State authorities.

[422.504(d)]

2. Access to facilities and records. The MA Organization agrees to the following:

(a) The Department of Health and Human Services (HHS), the Comptroller General, or

their designee may evaluate, through inspection or other means—

(i) The quality, appropriateness, and timeliness of services furnished to Medicare

enrollees under the contract;

(ii) The facilities of the MA Organization; and

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(iii) The enrollment and disenrollment records for the current contract period and ten

prior periods.

(b) HHS, the Comptroller General, or their designees may audit, evaluate, or inspect any

books, contracts, medical records, documents, papers, patient care documentation, and other

records of the MA Organization, related entity, contractor, subcontractor, or its transferee that

pertain to any aspect of services performed, reconciliation of benefit liabilities, and

determination of amounts payable under the contract, or as the Secretary may deem necessary to

enforce the contract.

(c) The MA Organization agrees to make available, for the purposes specified in section

(A) of this article, its premises, physical facilities and equipment, records relating to its
Medicare

enrollees, and any additional relevant information that CMS may require, in a manner that meets

CMS record maintenance requirements.

(d) HHS, the Comptroller General, or their designee’s right to inspect, evaluate, and audit

extends through 10 years from the final date of the contract period or completion of audit,

whichever is later unless-

(i) CMS determines there is a special need to retain a particular record or group of

records for a longer period and notifies the MA Organization at least 30 days before the normal

disposition date;

(ii) There has been a termination, dispute, or fraud or similar fault by the MA

Organization, in which case the retention may be extended to 10 years from the date of any

resulting final resolution of the termination, dispute, or fraud or similar fault; or

(iii) HHS, the Comptroller General, or their designee determines that there is a reasonable

possibility of fraud, in which case they may inspect, evaluate, and audit the MA Organization at

any time. [422.502(e)]

B. REPORTING REQUIREMENTS

1. The MA Organization shall have an effective procedure to develop, compile, evaluate, and

report to CMS, to its enrollees, and to the general public, at the times and in the manner that

CMS requires, and while safeguarding the confidentiality of the doctor-patient relationship,

statistics and other information as described in the remainder of this section (B). [422.516(a)]

2. The MA Organization agrees to submit to CMS certified financial information that must

include the following:

(a) Such information as CMS may require demonstrating that the organization has a

fiscally sound operation, including:

(i) The cost of its operations;

(ii) A description, submitted to CMS annually and within 120 days of the end of the fiscal

year, of significant business transactions (as defined in §422.500) between the MA Organization

and a party in interest showing that the costs of the transactions listed in paragraph (2)(a)(v) of

this section do not exceed the costs that would be incurred if these transactions were with

someone who is not a party in interest; or

(iii) If they do exceed, a justification that the higher costs are consistent with prudent

management and fiscal soundness requirements.

(iv) A combined financial statement for the MA Organization and a party in interest if

either of the following conditions is met:

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(aa) Thirty-five percent or more of the costs of operation of the MA Organization go to a

party in interest.

(bb) Thirty-five percent or more of the revenue of a party in interest is from the MA

Organization. [422.516(b)]

(v)Requirements for combined financial statements.

(aa) The combined financial statements required by paragraph (2)(a)(iv) must display in

separate columns the financial information for the MA Organization and each of the parties in

interest.

(bb) Inter-entity transactions must be eliminated in the consolidated column.

(cc) The statements must have been examined by an independent auditor in accordance

with generally accepted accounting principles and must include appropriate opinions and notes.

(dd) Upon written request from the MA Organization showing good cause, CMS may

waive the requirement that the organization’s combined financial statement include the financial

information required in paragraph (2)(a)(v) with respect to a particular entity. [422.516(c)]

(vi) A description of any loans or other special financial arrangements the MA

Organization makes with contractors, subcontractors, and related entities.

(b) Such information as CMS may require pertaining to the disclosure of ownership and

control of the MA Organization. [422.502(f)(1)(ii)]

(c) Patterns of utilization of the MA Organization’s services.

3. The MA Organization agrees to participate in surveys required by CMS and to submit to CMS

all information that is necessary for CMS to administer and evaluate the program and to

simultaneously establish and facilitate a process for current and prospective beneficiaries to

exercise choice in obtaining Medicare services. This information includes, but is not limited to:

(a) The benefits covered under the MA plan;

(b) The MA monthly basic beneficiary premium and MA monthly supplemental

beneficiary premium, if any, for the plan.

(c) The service area and continuation area, if any, of each plan and the enrollment

capacity of each plan;

(d) Plan quality and performance indicators for the benefits under the plan including —

(i) Disenrollment rates for Medicare enrollees electing to receive benefits through the

plan for the previous 2 years;

(ii) Information on Medicare enrollee satisfaction;

(iii) The patterns of utilization of plan services;

(iv) The availability, accessibility, and acceptability of the plan’s services;

(v) Information on health outcomes and other performance measures required by CMS;

(vi) The recent record regarding compliance of the plan with requirements of this part, as

determined by CMS; and

(vii) Other information determined by CMS to be necessary to assist beneficiaries in

making an informed choice among MA plans and traditional Medicare;

(e) Information about beneficiary appeals and their disposition;

(f) Information regarding all formal actions, reviews, findings, or other similar actions by

States, other regulatory bodies, or any other certifying or accrediting organization;

(g) Any other information deemed necessary by CMS for the administration or evaluation

of the Medicare program. [422.502(f)(2)]

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4. The MA Organization agrees to provide to its enrollees and upon request, to any individual

eligible to elect an MA plan, all informational requirements under §422.64 and, upon an

enrollee’s, request, the financial disclosure information required under §422.516. [422.502(f)(3)]

5. Reporting and disclosure under ERISA.

(a) For any employees’ health benefits plan that includes an MA Organization in its

offerings, the MA Organization must furnish, upon request, the information the plan needs to

fulfill its reporting and disclosure obligations (with respect to the MA Organization) under the

Employee Retirement Income Security Act of 1974 (ERISA).

(b) The MA Organization must furnish the information to the employer or the employer’s

designee, or to the plan administrator, as the term “administrator” is defined in ERISA.

[422.516(d)]

6. Electronic communication. The MA Organization must have the capacity to communicate

with CMS electronically. [422.504(b)]

7. Risk Adjustment data. The MA Organization agrees to comply with the requirements in

§422.310 for submitting risk adjustment data to CMS. [422.504(a)(8)]

Article VII

Renewal of the MA Contract

A. Renewal of contract: In accordance with §422.505, following the initial contract period, this

contract is renewable annually only if-

(1) The MA Organization has not provided CMS with a notice of intention not to renew;

[422.506(a)]

(2) CMS and the MA Organization reach agreement on the bid under 42 CFR Part 422,

Subpart F; and [422.505(d)]

(3) CMS informs the MA Organization that it authorizes a renewal.

B. Nonrenewal of contract

(1) Nonrenewal by the Organization.

(a) In accordance with §422.506, the MA Organization may elect not to renew its

contract with CMS as of the end of the term of the contract for any reason, provided it meets the

time frames for doing so set forth in subparagraphs (b) and (c) of this paragraph.

(b) If the MA Organization does not intend to renew its contract, it must notify—

(i) CMS, in writing, by the first Monday in June of the year in which the contract would

end, pursuant to §422.506

(ii) Each Medicare enrollee, at least 90 days before the date on which the nonrenewal is

effective. This notice must include a written description of all alternatives available for

obtaining Medicare services within the service area including alternative MA plans, Medigap

options, and original Medicare and prescription drug plans and must receive CMS approval prior

to issuance.

(iii) The general public, at least 90 days before the end of the current calendar year, by

publishing a CMS-approved notice in one or more newspapers of general circulation in each

community located in the MA Organization’s service area.

14

(c) CMS may accept a nonrenewal notice submitted after the applicable annual nonrenewal

notice deadline if —

(i) The MA Organization notifies its Medicare enrollees and the public in accordance

with subparagraph (1)(b)(ii) and (1)(b)(iii) of this section; and

(ii) Acceptance is not inconsistent with the effective and efficient administration of the

Medicare program.

(d) If the MA Organization does not renew a contract under subparagraph (1), CMS will

not enter into a contract with the Organization for 2 years from the date of contract separation

unless there are special circumstances that warrant special consideration, as determined by CMS.

[422.506(a)]

(2) CMS decision not to renew.

(a) CMS may elect not to authorize renewal of a contract for any of the following

reasons:

(i) The MA Organization’s level of enrollment, growth in enrollment, or insufficient

number of contracted providers is determined by CMS to threaten the viability of the

organization under the MA program and or be an indicator of beneficiary dissatisfaction with the

MA plan(s) offered by the organization.

(ii) For any of the reasons listed in §422.510(a) [Article VIII, section (B)(1)(a) of this

contract], which would also permit CMS to terminate the contract.

(iii) The MA Organization has committed any of the acts in §422.752(a) that would

support the imposition of intermediate sanctions or civil money penalties under 42 CFR Part 422

Subpart O.

(iv) The MA Organization did not submit a benefit and price bid or the benefit and price

bid was not acceptable [422.505(d)]

(b) Notice. CMS shall provide notice of its decision whether to authorize renewal of the

contract as follows:

(i) To the MA Organization by May 1 of the contract year, except in the event of

(2)(a)(iv) above, for which notice will be sent by September 1.

(ii) To the MA Organization’s Medicare enrollees by mail at least 90 days before the end

of the current calendar year.

(iii) To the general public at least 90 days before the end of the current calendar year, by

publishing a notice in one or more newspapers of general circulation in each community or

county located in the MA Organization’s service area.

(c) Notice of appeal rights. CMS shall give the MA Organization written notice of its

right to reconsideration of the decision not to renew in accordance with § 422.644.

[422.506(b)]

15

Article VIII

Modification or Termination of the Contract

A. Modification or Termination of Contract by Mutual Consent

1. This contract may be modified or terminated at any time by written mutual consent.

(a) If the contract is modified by written mutual consent, the MA Organization must

notify its Medicare enrollees of any changes that CMS determines are appropriate for

notification within time frames specified by CMS. [422.508(a)(2)]

(b) If the contract is terminated by written mutual consent, except as provided in section

(A)(2) of this Article, the MA Organization must provide notice to its Medicare enrollees and the

general public as provided in section B(2)(b)(ii) and B(2)(b)(iii) of this Article. [422.508(a)(1)]

2. If this contract is terminated by written mutual consent and replaced the day following such

termination by a new MA contract, the MA Organization is not required to provide the notice

specified in section B of this article.

[422.508(b)]

B. Termination of the Contract by CMS or the MA Organization

1. Termination by CMS.

(a) CMS may terminate a contract for any of the following reasons:

(i) The MA Organization has failed substantially to carry out the terms of its contract

with CMS.

(ii) The MA Organization is carrying out its contract with CMS in a manner that is

inconsistent with the effective and efficient implementation of 42 CFR Part 422.

(iii) CMS determines that the MA Organization no longer meets the requirements of 42

CFR Part 422 for being a contracting organization.

(iv) There is credible evidence that the MA Organization committed or participated in

false, fraudulent or abusive activities affecting the Medicare program, including submission of

false or fraudulent data.

(v) The MA Organization experiences financial difficulties so severe that its ability to

make necessary health services available is impaired to the point of posing an imminent and

serious risk to the health of its enrollees, or otherwise fails to make services available to the

extent that such a risk to health exists.

(vi) The MA Organization substantially fails to comply with the requirements in 42 CFR

Part 422 Subpart M relating to grievances and appeals.

(vii) The MA Organization fails to provide CMS with valid risk adjustment data as

required under §422.310 and 423.329(b)(3).

(viii) The MA Organization fails to implement an acceptable quality improvement

program as required under 42 CFR Part 422 Subpart D.

(ix) The MA Organization substantially fails to comply with the prompt payment

requirements in §422.520.

(x) The MA Organization substantially fails to comply with the service access

requirements in §422.112.

(xi) The MA Organization fails to comply with the requirements of §422.208 regarding

physician incentive plans.

16

(xii) The MA Organization substantially fails to comply with the marketing requirements

in 422.80.

(b) Notice. If CMS decides to terminate a contract for reasons other than the grounds

specified in section (B)(1)(a) above, it will give notice of the termination as follows:

(i) CMS will notify the MA Organization in writing 90 days before the intended date of

the termination.

(ii) The MA Organization will notify its Medicare enrollees of the termination by mail at

least 30 days before the effective date of the termination.

(iii) The MA Organization will notify the general public of the termination at least 30

days before the effective date of the termination by publishing a notice in one or more

newspapers of general circulation in each community or county located in the MA Organization’s

service area.

(c) Immediate termination of contract by CMS.

(i) For terminations based on violations prescribed in paragraph (B)(1)(a)(v) of this

article, CMS will notify the MA Organization in writing that its contract has been terminated

effective the date of the termination decision by CMS. If termination is effective in the middle

of a month, CMS has the right to recover the prorated share of the capitation payments made to

the MA Organization covering the period of the month following the contract termination.

(ii) CMS will notify the MA Organization’s Medicare enrollees in writing of CMS’

decision to terminate the MA Organization’s contract. This notice will occur no later than 30

days after CMS notifies the plan of its decision to terminate this contract. CMS will

simultaneously inform the Medicare enrollees of alternative options for obtaining Medicare

services, including alternative MA Organizations in a similar geographic area and original

Medicare.

(iii) CMS will notify the general public of the termination no later than 30 days after

notifying the MA Organization of CMS’ decision to terminate this contract. This notice will be

published in one or more newspapers of general circulation in each community or county located

in the MA Organization’s service area.

(d) Corrective action plan

(i) General. Before terminating a contract for reasons other than the grounds specified in

section (B)(1)(a)(v) of this article, CMS will provide the MA Organization with reasonable

opportunity, not to exceed time frames specified at 42 CFR Part 422 Subpart N, to develop and

receive CMS approval of a corrective action plan to correct the deficiencies that are the basis of

the proposed termination.

(ii) Exception. If a contract is terminated under section (B)(1)(a)(v) of this article, the

MA Organization will not have the opportunity to submit a corrective action plan.

(e) Appeal rights. If CMS decides to terminate this contract, it will send written notice to

the MA Organization informing it of its termination appeal rights in accordance with 42 CFR

Part 422 Subpart N. [422.510]

2. Termination by the MA Organization

(a) Cause for termination. The MA Organization may terminate this contract if CMS

fails to substantially carry out the terms of the contract.

(b) Notice. The MA Organization must give advance notice as follows:

(i) To CMS, at least 90 days before the intended date of termination. This notice must

specify the reasons why the MA Organization is requesting contract termination.

17

(ii) To its Medicare enrollees, at least 60 days before the termination effective date. This

notice must include a written description of alternatives available for obtaining Medicare

services within the service area, including alternative MA and MA-PD plans, PDP plans,

Medigap options, and original Medicare and must receive CMS approval.

(iii) To the general public at least 60 days before the termination effective date by

publishing a CMS-approved notice in one or more newspapers of general circulation in each

community or county located in the MA Organization’s geographic area.

(c) Effective date of termination. The effective date of the termination will be

determined by CMS and will be at least 90 days after the date CMS receives the MA

Organization’s notice of intent to terminate.

(d) CMS’ liability. CMS’ liability for payment to the MA Organization ends as of the first

day of the month after the last month for which the contract is in effect, but CMS shall make

payments for amounts owed prior to termination but not yet paid.

(e) Effect of termination by the organization. CMS will not enter into an agreement with

the MA Organization for a period of two years from the date the Organization has terminated this

contract, unless there are circumstances that warrant special consideration, as determined by

CMS. [422.512]

Article IX

Requirements of Other Laws and Regulations

A. The MA Organization agrees to comply with—

(1) Federal laws and regulations designed to prevent or ameliorate fraud, waste, and

abuse, including, but not limited to, applicable provisions of Federal criminal law, the False

Claims Act (31 USC 3729 et seq.) , and the anti-kickback statute (section 1128B(b) of the Act):

and

(2) HIPAA administrative simplification rules at 45 CFR parts 160, 162, and 164.

[422.504(h)]

B. The MA Organization maintains ultimate responsibility for adhering to and otherwise fully

complying with all terms and conditions of its contract with CMS, notwithstanding any

relationship(s) that the MA organization may have with related entities, contractors, or

subcontractors. [422.504(i)]

C. In the event that any provision of this contract conflicts with the provisions of any statute or

regulation applicable to an MA Organization, the provisions of the statute or regulation shall

have full force and effect.

18

Article X

Severability

The MA Organization agrees that, upon CMS’ request, this contract will be amended to exclude

any MA plan or State-licensed entity specified by CMS, and a separate contract for any such

excluded plan or entity will be deemed to be in place when such a request is made. [422.504(k)]

Article XI

Miscellaneous

A. Definitions. Terms not otherwise defined in this contract shall have the meaning given to

such terms in 42 CFR Part 422.

B. Alteration to Original Contract Terms. The MA Organization agrees that it has not altered in

any way the terms of this contract presented for signature by CMS. The MA Organization

agrees that any alterations to the original text the MA Organization may make to this contract

shall not be binding on the parties.

C. Approval to Begin Marketing and Enrollment. The MA Organization agrees that it must

complete CMS operational requirements prior to receiving CMS approval to begin Part C

marketing and enrollment activities. Such activities include, but are not limited to, establishing

and successfully testing connectivity with CMS systems to process enrollment applications (or

contracting with an entity qualified to perform such functions on the MA Organization’s

Sponsor’s behalf) and successfully demonstrating capability to submit accurate and timely price

comparison data. To establish and successfully test connectivity, the MA Organization must,

1) establish and test physical connectivity to the CMS data center, 2) acquire user identifications

and passwords, 3) receive, store, and maintain data necessary to perform enrollments and send

and receive transactions to and from CMS, and 4) check and receive transaction status

information.

D. Incorporation of Applicable Addenda. All addenda checked off and initialed on the cover

sheet of this contract by the MA Organization are hereby incorporated by reference.

19

In witness whereof, the parties hereby execute this contract.

FOR THE MA ORGANIZATION

     

Printed Name Title

     

Signature Date

     

Organization Address

FOR THE CENTERS FOR MEDICARE & MEDICAID SERVICES

     

Patricia P. Smith Date

Director

Medicare Advantage Group

Center for Beneficiary Choices

20

ATTACHMENT A

ATTESTATION OF ENROLLMENT INFORMATION

RELATING TO CMS PAYMENT

TO A MEDICARE ADVANTAGE ORGANIZATION

Pursuant to the contract(s) between the Centers for Medicare & Medicaid Services

(CMS) and (INSERT NAME OF MA ORGANIZATION), hereafter referred to as the MA

Organization, governing the operation of the following Medicare Advantage plans (INSERT

PLAN IDENTIFICATION NUMBERS HERE), the MA Organization hereby requests payment

under the contract, and in doing so, makes the following attestation concerning CMS payments

to the MA Organization. The MA Organization acknowledges that the information described

below directly affects the calculation of CMS payments to the MA Organization and that

misrepresentations to CMS about the accuracy of such information may result in Federal civil

action and/or criminal prosecution. This attestation shall not be considered a waiver of the MA

Organization’s right to seek payment adjustments from CMS based on information or data which

does not become available until after the date the MA Organization submits this attestation.

1. The MA Organization has reported to CMS for the month of (INDICATE MONTH

AND YEAR) all new enrollments, disenrollments, and changes in enrollees’ institutional status

with respect to the above-stated MA plans. Based on best knowledge, information, and belief as

of the date indicated below, all information submitted to CMS in this report is accurate,

complete, and truthful.

2. The MA Organization has reviewed the CMS monthly membership report and reply

listing for the month of (INDICATE MONTH AND YEAR) for the above-stated MA plans and

has reported to CMS any discrepancies between the report and the MA Organization’s records.

For those portions of the monthly membership report and the reply listing to which the MA

Organization raises no objection, the MA Organization, through the certifying CEO/CFO, will be

deemed to have attested, based on best knowledge, information, and belief as of the date

indicated below, to their accuracy, completeness, and truthfulness.

     

(INDICATE TITLE [CEO, CFO, or delegate])

on behalf of

     

(INDICATE MA ORGANIZATION)

     

DATE

21

ATTACHMENT B

ATTESTATION OF RISK ADJUSTMENT DATA INFORMATION RELATING TO

CMS PAYMENT TO A MEDICARE ADVANTAGE ORGANIZATION

Pursuant to the contract(s) between the Centers for Medicare & Medicaid Services

(CMS) and (INSERT NAME OF MA ORGANIZATION), hereafter referred to as the MA

Organization, governing the operation of the following Medicare Advantage plans (INSERT

PLAN IDENTIFICATION NUMBERS HERE), the MA Organization hereby requests payment

under the contract, and in doing so, makes the following attestation concerning CMS payments

to the MA Organization. The MA Organization acknowledges that the information described

below directly affects the calculation of CMS payments to the MA Organization or additional

benefit obligations of the MA Organization and that misrepresentations to CMS about the

accuracy of such information may result in Federal civil action and/or criminal prosecution.

The MA Organization has reported to CMS during the period of (INDICATE DATES)

all (INDICATE TYPE OF DATA – INPATIENT HOSPITAL, OUTPATIENT HOSPITAL, OR

PHYSICIAN) risk adjustment data available to the MA Organization with respect to the abovestated

MA plans. Based on best knowledge, information, and belief as of the date indicated

below, all information submitted to CMS in this report is accurate, complete, and truthful.

     

(INDICATE TITLE [CEO, CFO, or delegate])

on behalf of

     

(INDICATE MA ORGANIZATION)

     

DATE

22

[SAMPLE — DO NOT USE — THIS DOCUMENT WILL BE SENT DIRECTLY TO THE MAO THROUGH HPMS]

ATTACHMENT C – Medicare Advantage Plan Attestation of Benefit Plan and Price

<Legal Entity Name>

<Contract # >

Date: <XX/XX/XXXX>

I attest that the following plan numbers as established in the final Plan Benefit Package (PBP)
will be operated by the above-stated

organization and made available to eligible Medicare beneficiaries in the approved service area
during program year 2006.

Plan

ID

Segment

ID

Version Plan Name Plan Type Transaction

Type

MA

Premium

Part D

Premium

CMS

Approval

Date

Effective Da

<xxx> <x> <x> <Plan Name> <Plan Type> <Transaction

Type>

$<Plan

Premium>

$<Part D

Premium>

<xx/xx/xx> <xx/xx/xx>

<xxx> <x> <x> <Plan Name> <Plan Type> <Transaction

Type>

$<Plan

Premium>

$<Part D

Premium>

<xx/xx/xx> <xx/xx/xx>

<xxx> <x> <x> <Plan Name> <Plan Type> <Transaction

Type>

$<Plan

Premium>

$<Part D

Premium>

<xx/xx/xx> <xx/xx/xx>

     

CEO CFO

<Name of CEO> Date <Name of CFO> Date

<Title> <Title>

<Address 1> <Address 1>

<Address 2> <Address 2>

<City, State Zip> <City, State Zip>

<Phone #> <Phone #>EX-10.2

ADDENDUM TO MEDICARE MANAGED CARE CONTRACT PURSUANT TO

SECTIONS 1860D-1 THROUGH 1860D-42 OF THE SOCIAL SECURITY ACT

FOR THE OPERATION OF A VOLUNTARY MEDICARE PRESCRIPTION

DRUG PLAN

The Centers for Medicare & Medicaid Services (hereinafter referred to as “CMS”) and

     , a Medicare

managed care organization (hereinafter referred to as the MA-PD Sponsor) agree to

amend the contract (INSERT “H” OR “R” NUMBER) governing the MA-PD Sponsor’s

operation of a Part C plan described in Section 1851(a)(2)(A) of the Social Security Act

(hereinafter referred to as “the Act”) or a Medicare cost plan to include this addendum

under which the MA-PD Sponsor shall operate a Voluntary Medicare Prescription Drug

Plan pursuant to sections 1860D-1 through 1860D-42 (with the exception of section

1860D-22 and 1860D-31) of the Act.

This addendum is made pursuant to Subpart L of 42 CFR Part 417 (in the case of cost

plan sponsors offering a Part D benefit) and Subpart K of 42 CFR Part 422 (in the case of

an MA-PD Sponsor offering a Part C plan).

NOTE: For purposes of this addendum, unless otherwise noted, reference to an “MA-PD

Sponsor” or “MA-PD Plan” is deemed to include a cost plan sponsor or a MA private

fee-for-service contractor offering a Part D benefit.

2

Article I

Medicare Voluntary Prescription Drug Benefit

A. The MA-PD Sponsor agrees to operate one or more Medicare Voluntary Prescription

Drug Plans as described in its application and related materials, including but not

limited to all the attestations contained therein and all supplemental guidance, for

Medicare approval and in compliance with the provisions of this addendum, which

incorporates in its entirety the Solicitation For Applications from Prescription Drug

Plans released on January 21, 2005 (as revised on March 9, 2005) [applicable to

Medicare Part C contractors] or the Solicitation for Applications from Cost Plan

Sponsors released on January 21, 2005 (as revised on March 9, 2005) [applicable to

Medicare cost plan contractors] (hereinafter collectively referred to as “the

addendum”). The MA-PD Sponsor also agrees to operate in accordance with the

regulations at 42 CFR §423.1 through 42 CFR §423.910 (with the exception of

Subparts Q, R, and S), sections 1860D-1 through 1860D-42 (with the exception of

sections 1860D-22(a) and 1860D-31) of the Social Security Act, and the applicable

solicitation identified above, as well as all other applicable Federal statutes,

regulations, and policies. This addendum is deemed to incorporate any changes that

are required by statute to be implemented during the term of this addendum and any

regulations or policies implementing or interpreting such statutory provisions.

B. CMS agrees to perform its obligations to the MA-PD Sponsor consistent with the

regulations at 42 CFR §423.1 through 42 CFR §423.910 (with the exception of

Subparts Q, R, and S), sections 1860D-1 through 1860D-42 (with the exception of

sections 1860D-22(a) and 1860D-31) of the Social Security Act, and the applicable

solicitation, as well as all other applicable Federal statutes, regulations, and policies.

C. CMS agrees that it will not implement, other than at the beginning of a calendar year,

regulations under 42 CFR Part 423 that impose new, significant regulatory

requirements on the MA-PD Sponsor. This provision does not apply to new

requirements mandated by statute.

D. This addendum is in no way intended to supersede or modify 42 CFR, Parts 417, 422

or 423. Failure to reference a regulatory requirement in this addendum does not

affect the applicability of such requirements to the MA-PD Sponsor and CMS.

Article II

Functions to be Performed by the MA-PD Sponsor

A. ENROLLMENT

1. MA-PD Sponsor agrees to enroll in its MA-PD plan only Part D-eligible

beneficiaries as they are defined in 42 CFR §423.30(a) and who have elected to

enroll in MA-PD Sponsor’s Part C or Section 1876 benefit.

3

2. If the MA-PD Sponsor is a cost plan sponsor, the MA-PD Sponsor acknowledges

that its Section 1876 plan enrollees are not required to elect enrollment in its Part

D plan.

B. PRESCRIPTION DRUG BENEFIT

1. MA-PD Sponsor agrees to provide the required prescription drug coverage as

defined under 42 CFR §423.100 and, to the extent applicable, supplemental

benefits as defined in 42 CFR §423.100 and in accordance with Subpart C of 42

CFR Part 423. MA-PD Sponsor also agrees to provide Part D benefits as

described in the MA-PD Sponsor’s Part D bid(s) approved each year by CMS

(and in the Attestation of Benefit Plan and Price, attached hereto).

2. MA-PD Sponsor agrees to calculate and collect beneficiary Part D premiums in

accordance with 42 CFR §§423.286 and 423.293.

3. If the MA-PD Sponsors is a cost plans sponsor, it acknowledge that its Part D

benefit is offered as an optional supplemental service in accordance with 42 CFR

§417.440(b)(2)(ii).

C. DISSEMINATION OF PLAN INFORMATION

1. MA-PD Sponsor agrees to provide the information required in 42 CFR §423.48.

2. MA-PD Sponsor agrees to disclose information related to Part D benefits to

beneficiaries in the manner and the form specified by CMS under 42 CFR

§§423.128 and 423.50 and in the “Marketing Materials Guidelines for Medicare

Advantage-Prescription Drug Plans (MA-PDs) and Prescription Drug Plans

(PDPs).”

3. MA-PD Sponsor certifies that all materials it submits to CMS under the File and

Use Certification authority described in the Marketing Materials Guidelines are

accurate, truthful, not misleading, and consistent with CMS marketing guidelines.

D. QUALITY ASSURANCE/UTILIZATION MANAGEMENT

MA-PD Sponsor agrees to operate quality assurance, cost, and utilization

management, medication therapy management programs, and support electronic

prescribing in accordance with Subpart D of 42 CFR Part 423.

E. APPEALS AND GRIEVANCES

MA-PD Sponsor agrees to comply with all requirements in Subpart M of 42 CFR Part

423 governing coverage determinations, grievances and appeals, and formulary

exceptions. MA-PD Sponsor acknowledges that these requirements are separate and

distinct from the appeals and grievances requirements applicable to the MA-PD

Sponsor through the operation of its Part C or cost plan benefits.

4

F. PAYMENT TO MA-PD SPONSOR

1. MA-PD Sponsor and CMS agree that payment paid for Part D services under the

addendum will be governed by the rules in Subpart G of 42 CFR Part 423.

2. If the MA-PD Sponsor is participating in the Part D Reinsurance Payment

Demonstration, described in 70 FR 9360 (Feb. 25, 2005), it affirms that it will not

seek payment under the demonstration for services provided to employer group

enrollees.

G. BID SUBMISSION AND REVIEW

If the MA-PD Sponsor intends to participate in the Part D program for the future year,

MA-PD Sponsor agrees to submit a future year’s Part D bid, including all required

information on premiums, benefits, and cost-sharing, by the applicable due date, as

provided in Subpart F of 42 CFR Part 423 so that CMS and the MA-PD Sponsor may

conduct negotiations regarding the terms and conditions of the proposed bid and

benefit plan renewal. MA-PD Sponsor acknowledges that failure to submit a timely

bid under this section may affect the sponsor’s ability to offer a Part C plan, pursuant

to the provisions of 42 CFR §422.4(c).

H. COORDINATION WITH OTHER PRESCRIPTION DRUG COVERAGE

1. MA-PD Sponsor agrees to comply with the coordination requirements with State

Pharmacy Assistance Programs (SPAPs) and plans that provide other prescription

drug coverage as described in Subpart J of 42 CFR Part 423.

2. MA-PD Sponsor agrees to comply with Medicare Secondary Payer procedures as

stated in 42 CFR §423.462.

I. SERVICE AREA AND PHARMACY ACCESS

1. The MA-PD Sponsor agrees to provide Part D benefits in the service area for

which it has been approved by CMS to offer Part C or cost plan benefits utilizing

a pharmacy network and formulary approved by CMS that meet the requirements

of 42 CFR §423.120.

2. The MA-PD Sponsor agrees to ensure adequate access to Part D-covered drugs at

out-of-network pharmacies according to 42 CFR §423.124.

3. MA-PD Sponsor agrees to provide benefits by means of point-of-service systems

to adjudicate prescription drug claims in a timely and efficient manner in

compliance with CMS standards, except when necessary to provide access in

underserved areas, I/T/U pharmacies (as defined in 42 CFR §423.100), and longterm

care pharmacies (as defined in 42 CFR §423.100).

5

4. MA-PD Sponsor agrees to contract with any pharmacy that meets the MA-PD

Sponsor’s reasonable and relevant standard terms and conditions. If MA-PD

Sponsor has demonstrated that it historically fills 98% or more of its enrollees’

prescriptions at pharmacies owned and operated by the MA-PD Sponsor (or

presents compelling circumstances that prevent the sponsor from meeting the 98%

standard or demonstrates that its Part D plan design will enable the sponsor to

meet the 98% standard during the contract year), this provision does not apply to

MA-PD Sponsor’s plan.

5. The provisions of 42 CFR §423.120(a) concerning the TRICARE retail pharmacy

access standard do not apply to MA-PD Sponsor if the Sponsor has demonstrated

to CMS that it historically fills more than 50% of its enrollees’ prescriptions at

pharmacies owned and operated by the MA-PD Sponsor. MA-PD Sponsors

excused from meeting the TRICARE standard are required to demonstrate retail

pharmacy access that meets the requirements of 42 CFR §422.112 for a Part C

contractor and 42 CFR §417.416(e) for a cost plan contractor.

J. COMPLIANCE PLAN/PROGRAM INTEGRITY

MA-PD Sponsor agrees that it will develop and implement a compliance plan that

applies to its Part D-related operations, consistent with 42 CFR §423.504(b)(4)(vi).

K. LOW-INCOME SUBSIDY

MA-PD Sponsor agrees that it will participate in the administration of subsidies for

low-income individuals according to Subpart P of 42 CFR Part 423.

L. BENEFICIARY FINANCIAL PROTECTIONS

The MA-PD Sponsor agrees to afford its enrollees protection from liability for

payment of fees that are the obligation of the MA-PD Sponsor in accordance with 42

CFR §423.505(g).

M. RELATIONSHIP WITH RELATED ENTITIES, CONTRACTORS, AND

SUBCONTRACTORS

1. The MA-PD Sponsor agrees that it maintains ultimate responsibility for adhering

to and otherwise fully complying with all terms and conditions of this addendum.

2. The MA-PD Sponsor shall ensure that any contracts or agreements with

subcontractors or agents performing functions on the MA-PD Sponsor’s behalf

related to the operation of the Part D benefit are in compliance with 42 CFR

§423.505(i).

N. CERTIFICATION OF DATA THAT DETERMINE PAYMENT

6

MA-PD Sponsor must provide certifications in accordance with 42 CFR §423.505(k).

Article III

Record Retention and Reporting Requirements

A. MAINTENANCE OF RECORDS

MA-PD Sponsor agrees to maintain records and provide access in accordance with 42

CFR §§423.504(d) and 505(d) and (e).

B. GENERAL REPORTING REQUIREMENTS

The MA-PD Sponsor agrees to submit to information to CMS according to 42 CFR

§§423.505(f), 423.514, and the “Final Medicare Part D Reporting Requirements,” a

document issued by CMS and subject to modification each program year.

C. CMS License For Use of Plan Formulary

PDP Sponsor agrees to submit to CMS each plan’s formulary information,

including any changes to its formularies, and hereby grants to the Government[,

and any person or entity who might receive the formulary from the Government,]

a non-exclusive license to use all or any portion of the formulary for any purpose

related to the administration of the Part D program, including without limitation

publicly distributing, displaying, publishing or reconfiguration of the information

in any medium, including www.medicare.gov, and by any electronic, print or

other means of distribution.

Article IV

HIPAA Transactions/Privacy/Security

A. MA-PD Sponsor agrees to comply with the confidentiality and enrollee record

accuracy requirements specified in 42 CFR §423.136.

B. MA-PD Sponsor agrees to enter into a business associate agreement with the entity

with which CMS has contracted to track Medicare beneficiaries’ true out-of-pocket

costs.

Article V

Addendum Term and Renewal

A. TERM OF ADDENDUM

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This addendum is effective from the date of CMS’ authorized representative’s

signature through December 31, 2006. This addendum shall be renewable for

successive one-year periods thereafter according to 42 CFR §423.506. MA-PD

Sponsor shall not conduct Part D-related marketing activities prior to October 1, 2005

and shall not process enrollment applications prior to November 15, 2005. MA-PD

Sponsor shall begin delivering Part D benefit services on January 1, 2006.

B. QUALIFICATION TO RENEW ADDENDUM

1. In accordance with 42 CFR §423.507, the MA-PD Sponsor will be determined

qualified to renew this addendum annually only if—

(a) CMS informs the MA-PD Sponsor that it is qualified to renew its

addendum; and

(b) The MA-PD Sponsor has not provided CMS with a notice of intention

not to renew in accordance with Article VII of this addendum.

2. Although MA-PD Sponsor may be determined qualified to renew its addendum

under this Article, if the MA-PD Sponsor and CMS cannot reach agreement on

the Part D bid under Subpart F of 42 CFR Part 423, no renewal takes place, and

the failure to reach agreement is not subject to the appeals provisions in Subpart N

of 42 CFR Parts 422 or 423. (Refer to Article XI for consequences of nonrenewal

on the Part C contract and the ability to enter into a Part C contract.)

Article VI

Nonrenewal of Addendum

A. NONRENEWAL BY THE MA-PD SPONSOR

1. MA-PD Sponsor may non-renew this addendum in accordance with 42

CFR 423.507(a).

2. If the MA-PD Sponsor non-renews this addendum under this Article, CMS cannot

enter into a Part D addendum with the organization for 2 years unless there are

special circumstances that warrant special consideration, as determined by CMS.

B. NONRENEWAL BY CMS

CMS may non-renew this addendum under the rules of 42 CFR 423.507(b). (Refer to

Article X for consequences of non-renewal on the Part C contract and the ability to

enter into a Part C contract.)

Article VII

Modification or Termination of Addendum by Mutual Consent

This addendum may be modified or terminated at any time by written mutual consent in

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accordance with 42 CFR 423.508. (Refer to Article X for consequences of non-renewal

on the Part C contract and the ability to enter into a Part C contract.)

Article VIII

Termination of Addendum by CMS

CMS may terminate this addendum in accordance with 42 CFR 423.509. (Refer to

Article X for consequences of non-renewal on the Part C contract and the ability to enter

into a Part C contract.)

Article IX

Termination of Addendum by the MA-PD Sponsor

A. The MA-PD Sponsor may terminate this addendum only in accordance with 42 CFR

423.510.

B. CMS will not enter into a Part D addendum with an organization that has terminated

its addendum within the preceding 2 years unless there are circumstances that warrant

special consideration, as determined by CMS.

C. If the addendum is terminated under section A of this Article, the MA-PD Sponsor

must ensure the timely transfer of any data or files. (Refer to Article X for

consequences of non-renewal on the Part C contract and the ability to enter into a Part

C contract.)

Article X

Relationship Between Addendum and Part C Contract or 1876 Cost Contract

A. MA-PD Sponsor acknowledges that, if it is a Medicare Part C contractor, the

termination or nonrenewal of this addendum by either party may require CMS to

terminate or non-renew the Sponsor’s Part C contract in the event that such nonrenewal

or termination prevents the MA-PD Sponsor from meeting the requirements

of 42 CFR §422.4(c), in which case the Sponsor must provide the notices specified in

this contract, as well as the notices specified under Subpart K of 42 CFR Part 422.

MA-PD Sponsor also acknowledges that Article X.B. of this addendum may prevent

the sponsor from entering into a Part C contract for two years following an addendum

termination or non-renewal where such non-renewal or termination prevents the MAPD

Sponsor from meeting the requirements of 42 CFR §422.4(c).

B. The termination of this addendum by either party shall not, by itself, relieve the

parties from their obligations under the Part C or cost plan contracts to which this

document is an addendum.

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C. In the event that the MA-PD Sponsor’s Part C or cost plan contract (as applicable) is

terminated or nonrenewed by either party, the provisions of this addendum shall also

terminate. In such an event, the MA-PD Sponsor and CMS shall provide notice to

enrollees and the public as described in this contract as well as 42 CFR Part 422,

Subpart K or 42 CFR Part 417, Subpart K, as applicable.

Article XI

Intermediate Sanctions

The MA-PD Sponsor shall be subject to sanctions and civil monetary penalties,

consistent with Subpart O of 42 CFR Part 423.

Article XII

Severability

Severability of the addendum shall be in accordance with 42 CFR §423.504(e).

Article XIII

Miscellaneous

A. DEFINITIONS: Terms not otherwise defined in this addendum shall have the

meaning given such terms at 42 CFR Part 423 or, as applicable, 42 CFR Part 422 or

Part 417.

B. ALTERATION TO ORIGINAL ADDENDUM TERMS: The MA-PD Sponsor

agrees that it has not altered in any way the terms of the MA-PD addendum presented

for signature by CMS. MA-PD Sponsor agrees that any alterations to the original text

the MA-PD Sponsor may make to this addendum shall not be binding on the parties.

C. ADDITIONAL CONTRACT TERMS: The MA-PD Sponsor agree to include in this

addendum other terms and conditions in accordance with 42 CFR §423.505(j).

D. CMS APPROVAL TO BEGIN MARKETING AND ENROLLMENT ACTIVITIES:

The MA-PD Sponsor agrees that it must complete CMS operational requirements

related to its Part D benefit prior to receiving CMS approval to begin MA-PD plan

marketing activities relating to its Part D benefit. Such activities include, but are not

limited to, establishing and successfully testing connectivity with CMS systems to

process enrollment applications (or contracting with an entity qualified to perform

such functions on MA-PD Sponsor’s behalf) and successfully demonstrating the

capability to submit accurate and timely price comparison data. To establish and

successfully test connectivity, the PDP Sponsor must, 1) establish and test physical

connectivity to the CMS data center, 2) acquire user identifications and passwords, 3)

receive, store, and maintain data necessary to perform enrollments and send and

10

receive transactions to and from CMS, and 4) check and receive transaction status

information.

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In witness whereof, the parties hereby execute this addendum.

FOR THE MA-PD SPONSOR

     

Printed Name Title

     

Signature Date

     

Organization Address

FOR THE CENTERS FOR MEDICARE & MEDICAID SERVICES

     

Patricia Smith Date

Director

Medicare Advantage Group

Center for Beneficiary Choices

     

Robert Donnelly Date

Director

Medicare Drug Benefit Group

Center for Beneficiary Choices

12

PART C/D BENEFIT PLAN(S) DESCRIPTION

TO BE ATTACHED TO MA CONTRACT

SECTION 1876/PART D OPTIONAL SUPPLEMENTAL BENEFIT PLAN

DESCRIPTION TO BE ATTACHED TO SECTION 1876 CONTRACT

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