Document:

Exhibit 10.147

 

AMENDMENT

to the

PARTICIPATING PHYSICIAN GROUP

PROVIDER SERVICES AGREEMENT

between

FOUNDATION HEALTH SYSTEM AFFILIATES

and

A.V. MEDICAL GROUP

 

The
Participating Physician Group Provider Services Agreement (“Agreement”) dated
June 1, 1998 between A.V.MEDICAL GROUP (“PPG”) and Foundation Health Systems
Affiliate(s) (“FHS”), as subsequently amended by instruments dated July 1, 1999
is hereby amended effective November 1, 2000.

 

FHS
and PPG hereby agree to amend the Agreement as follows:

 

1.          Addendum B to the Agreement, Section B. STANDARD HMO. Subsection 1.1 Capitation
Rates shall be deleted in its entirety and replaced with the following:

 

1.1            Capitation Rates. PPG Capitation for Standard HMO Members shall
be determined on a monthly basis by multiplying the following normalized PMPM
rates by the age, sex and benefit plan factors set forth in Addendum B for each
assigned Member.  Normalized rates
represent the PMPM prior to the adjustment for PPG’s assigned Members’ age, sex
and benefit plan.  Actual PPG gross
Capitation shall fluctuate from month to month to the extent that PPG’s age,
sex and benefit plan mix fluctuates.

 

	
  Effective
  Date

  	
   

  	
  Standard
  HMO

  Capitation

  
	
  November
  1, 2000

  	
   

  	
  ***
  PMPM

  
	
  May 1, 2001

  	
   

  	
  ***
  PMPM

  

 

2.          Addendum B to the Agreement, Section B. STANDARD HMO, Subsection 3.1 Shared
Risk Budgets shall be deleted in its entirety and replaced with the
following:

 

3.1                                  Shared Risk Budget.  HMO
shall fund the Shared Risk Budget for Members, with normalized rates.  These normalized rates shall be adjusted for
PPG’s assigned Members by the age, sex and benefit plan factors as set forth in
Addendum B.  Actual Shared Risk Budget
shall fluctuate from month to month to the extent that PPG’s age, sex and
benefit plan mix fluctuates.

 

	
  Standard
  HMO Shared Risk

  Budget-

  Entire Calendar Year 2000

  
	
  *** PMPM

  

 

3.          Addendum
B to the Agreement, Section C, SMALL GROUP
HMO.  Subsection
[ILLEGIBLE] Capitation Rates shall be deleted in its entirety and
replaced with the following:

 

1.1                                  Capitation Rates.  PPG
Capitation for Small Group HMO Members shall be determined on a monthly basis
by multiplying the following normalized PMPM rates by the age, sex and benefit
plan factors set forth in Addendum B for each assigned Member.  Normalized PMPM rates represent the PMPM prior
to the

 

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

 

1

 

adjustment for PPG’s assigned Members’ age, sex and benefit plan.  Actual PPG gross Capitation shall fluctuate
from month to month to the extent that PPG’s age, sex and benefit plan mix
fluctuates.

 

	
  Effective
  Date

  	
   

  	
  Small
  Group HMO

  Capitation

  
	
  November
  1, 2000

  	
   

  	
  ***
  PMPM

  
	
  May
  1, 2001

  	
   

  	
  ***
  PMPM

  

 

4.          Addendum
B to the Agreement, Section C.  SMALL GROUP HMO. Subsection 3.1 Shared
Risk Budget shall be deleted in its entirety and replaced with the
following:

 

3.1                                  Shared Risk Budget.  HMO
shall fund the Shared Risk Budget for Members, with normalized rates.  These normalized rates shall be adjusted for
PPG’s assigned Members by the age, sex and benefit plan factors as set forth in
Addendum B.  Actual Shared Risk Budget
shall fluctuate from month to month to the extent that PPG’s age, sex and
benefit plan mix fluctuates.

 

	
  Small
  Group HMO Shared

  Risk Budget

  Entire Calendar Year 2000

  
	
  *** PMPM

  

 

5.          Addendum
B to the Agreement, Section D, INDIVIDUAL
HMO.  Subsection 1.1 Capitation
Rates shall be deleted in its entirety and replaced with the following:

 

1.1                                  Capitation Rates.  PPG
Capitation for Individual HMO Members shall be determined on a monthly basis by
multiplying the following normalized PMPM rates by the age, sex and benefit
plan factors set forth in Addendum B for each assigned Member.  Normalized PMPM rates represent the PMPM
prior to the adjustment for PPG’s assigned Members’ age, sex and benefit
plan.  Actual PPG gross Capitation shall
fluctuate from month to month to the extent that PPG’s age, sex and benefit
plan mix fluctuates.

 

	
  Effective
  Date

  	
   

  	
  Individual
  HMO

  Capitation

  
	
  November
  1, 2000

  	
   

  	
  *** PMPM

  
	
  May
  1, 2001

  	
   

  	
  *** PMPM

  

 

6.          Addendum
B to the Agreement, Section D, INDIVIDUAL
HMO. Subsection 3.1 Shared Risk Budget shall be deleted
in its entirety and replaced with the following:

 

3.1                                  Shared Risk Budget.  HMO shall fund
the Shared Risk Budget for Members, with normalized rates.  These normalized rates shall be adjusted for
PPG’s assigned Members by the age, sex and benefit plan factors as set forth in
Addendum B.  Actual Shared Risk Budget
shall fluctuate from month to month to the extent that PPG’s age, sex and
benefit plan mix fluctuates.

 

	
  Individual
  HMO Shared

  Risk Budget-

  Entire Calendar Year 2000

  
	
  *** PMPM

  

 

7.          Addendum
B to the Agreement, Section G. COMMERCIAL
POS. Subsection 4. Professional Capitation Rate shall be
deleted in its entirety and replaced with the following:

 

2

 

4.                                         Professional Capitation Rate.  PPG
shall be compensated for rendering professional In-Network Services to
Commercial POS Members at the PMPM amounts set forth for Commercial HMO
Members, less a *** withhold (Professional Capitation).  This Withhold shall partially fund the
Professional Out-of-Network Budget.

 

8.          Addendum
B to the Agreement.  Section G. COMMERCIAL POS. Subsection 6.1 POS
Shared Risk Budgets shall be deleted in its entirety and replaced with the
following:

 

6.1                                  POS Shared Risk Budgets.  The
budgets shall be determined for each Commercial POS population: Standard POS,
Small Group POS and, at a later date, Individual POS Members.  Each Budget shall cover In-Network.  Out-of-Network and Out-of-Area Shared Risk
Services.  Each of the normalized Shared
Risk Budgets shall be equal to the normalized HMO Shared Risk Budget, or
institutional capitation PMPM, if applicable, and multiplied by one hundred and
five percent (105%).  Actual Shared Risk
Budget shall fluctuate from month to month to the extent that PPG’s age, sex
and benefit plan mix fluctuates.

 

	
  Entire Calendar Year 2000

  
	
  Standard HMO

  Shared Risk - 5%

  	
   

  	
  Small Group
  HMO 

  Shared Risk + 5%

  	
   

  	
  Individual
  HMO

  Shared Risk + 5%

  
	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  

 

9.          Addendum
B to the Agreement, Section J  Pharmacy Shared Risk Program and
Section K.  Pharmacy Rebate Program shall be
deleted in their entirety and replaced with the following:

 

J.                   Pharmacy Shared Risk Program.  The
Pharmacy Shared Risk Program shall be applicable to the following Members:
Standard HMO, Flex Funded HMO, Small Group HMO, and Individual HMO.

 

1.                                         Pharmacy Budget.  Each
month HMO shall fund the Pharmacy Budget at $ 16.00 per eligible Member per
month (“PEMPM”) subject to the age, sex and benefit plan factors set forth in
Addendum B.  Such Pharmacy Budget shall
be effective for the entire calendar year. 
For year 2000 the Pharmacy Budget shall be adjusted according to the
aggregate PEMPM dollar change experienced by those participating physician
groups comprising the top third of lowest PEMPM normalized pharmacy costs,
based on current calendar year experience. 
Such adjustment shall occur prior to calculating the final settlement
for the Pharmacy Reconciliation, as set forth in this Addendum.  Any calculation of the normalized pharmacy
costs shall be based upon actual claims. 
The top third calculation shall be weighed by eligible Member months.

 

2.                                         Pharmacy Reconciliation for
Commercial HMO Members.  For each Reconciliation Period, HMO shall
calculate pharmacy claims subject to this Program as outlined in the Operations
Manual.  HMO shall compare such claims
to the corresponding Pharmacy Budget. 
In the event pharmacy claims are less than the Pharmacy Budget, PPG’s
share of the Pharmacy Budget surplus shall be fifty percent (50%).  In the event pharmacy claims exceed the
Pharmacy Budget, PPG’s share of the Pharmacy Budget deficit shall be fifty
percent (50%).

 

HMO shall perform an interim and final settlement for the Pharmacy Risk
Sharing Program.  The timing of these
settlements shall correspond to the interim and final settlements of other risk
sharing programs.  Subject to Section
4.3 of this Agreement, any Pharmacy Budget deficit shall be offset against any
amounts payable by HMO, or any amounts remaining in the Withhold Fund, or shall
be offset against Capitation.

 

3

 

Except as so amended, all other provisions of the Agreement shall remain
unchanged and in effect.

 

IN WITNESS WHEREOF, the parties hereto have executed this
Amendment by their officers duly authorized to be effective on the date and
year first written above.

 

	
  A.V. MEDICAL GROUP

  	
   

  	
  FOUNDATION HEALTH SYSTEMS AFFILIATES

  HEALTH NET

  
	
   

  	
   

  	
   

  
	
  /s/
  Peter G. Goll

  	
   

  	
  /s/
  Christopher Ciano

  	
   

  
	
  Signature

  	
   

  	
  Christopher
  Ciano

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Senior
  Vice President

  	
   

  	
  Senior
  Vice President and General Manager

  	
   

  
	
  Title

  	
   

  	
  Southern
  California

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  12-10-00

  	
   

  	
  12-18-00

  	
   

  
	
  Date

  	
   

  	
  Date

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  95 3929309

  	
   

  	
   

  	
   

  
	
  Federal
  Tax Identification Number

  	
   

  	
   

  	
   

  

 

4Exhibit 10.148

 

AMENDMENT

to the

PROVIDER SERVICES AGREEMENT

between

HEALTH NET, INC. AFFILIATES

and

A.V. MEDICAL GROUP

 

The
Participating Physician Group Provider Services Agreement dated June 1,
1998 between A.V. Medical Group (“PPG”) and Health Net, Inc. Affiliates
(“HNI”), as subsequently amended by instruments dated July 1, 1999,
November 1, 2000, the amendment executed on February 28, 2001 and
January 1, 2003 (hereinafter the “Agreement”) is hereby amended effective
March 1, 2003.

 

HNI
and PPG hereby agree to amend the Agreement as follows:

 

1.          Addendum A to the Agreement, “BENEFIT PROGRAMS AND AFFILIATES”,
Subsection 1.  BENEFIT PROGRAMS, is hereby amended to
add the following:

 

	
  BENEFIT PROGRAM

  	
   

  	
  ADDENDUM

  	
   

  	
  PPG

  PARTICIPATION

  Yes/No

  
	
  Health
  Insurance Portability and Accountability Act (HIPAA)

  	
   

  	
  I

  	
   

  	
  YES

  

 

2.          Addendum
B to the Agreement, Section B, STANDARD
HMO, Subsection 1.1 Capitation
Rates shall be deleted in its entirety and replaced with the
following:

 

1.1            Capitation Rates.  PPG
Capitation for Standard HMO, Members shall be determined on a monthly basis by
multiplying the following normalized PMPM rates by the age, sex and benefit
plan factors set forth in Addendum B for each assigned Member.  Normalized rates represent the PMPM prior to
the adjustment for PPG’s assigned Members’ age, sex and benefit plan.  Actual PPG gross Capitation shall fluctuate
from month to month to the extent that PPG’s age, sex and benefit plan mix
fluctuates.

 

	
  Effective 3/1/03-2/29/04

  Standard HMO Capitation

  	
   

  	
  Effective 3/1/04

  Standard HMO Capitation

  
	
  *** PMPM

  	
   

  	
  *** PMPM

  

 

3.          Addendum B to the Agreement, Section B, STANDARD HMO, Subsection 3.1 Shared Risk Budgets shall be deleted in
its entirety and replaced with the following:

 

3.1            Shared Risk Budget.  HMO
shall fund the Shared Risk Budget for Members, with normalized rates.  These normalized rates shall be adjusted for
PPG’s assigned Members by the age, sex and benefit plan factors as set forth in
Addendum B.  Actual Shared Risk Budget
shall fluctuate from month to month to the extent that PPG’s age, sex and
benefit plan mix fluctuates.

 

	
  Effective 3/1/03-2/29/04

  Standard

  HMO Shared Risk Budget

  	
   

  	
  Effective 3/1/04

  Standard

  HMO Shared Risk Budget

  
	
  *** PMPM

  	
   

  	
  *** PMPM

  

 

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

 

1

 

4.          Addendum B to the Agreement, Section C. SMALL GROUP HMO. Subsection 1.1 Capitation Rates shall be deleted in
its entirety and replaced with the following:

 

1.1                                         Capitation Rates.  PPG
Capitation for Small Group HMO Members shall be determined on a monthly basis
by multiplying the following normalized PMPM rates by the age, sex and benefit
plan factors set forth in Addendum B for each assigned Member.  Normalized PMPM rates represent the PMPM
prior to the adjustment for PPG’s assigned Members’ age, sex and benefit
plan.  Actual PPG gross Capitation shall
fluctuate from month to month to the extent that PPG’s age, sex and benefit
plan mix fluctuates.

 

	
  Effective 3/1/03-2/29/04

  Small Group

  HMO Capitation

  	
   

  	
  Effective 3/1/04

  Small Group

  HMO Capitation

  
	
  *** PMPM

  	
   

  	
  *** PMPM

  

 

5.          Addendum
B to the Agreement, Section C. SMALL
GROUP HMO, Subsection 3. Shared Risk Budget shall be deleted in its entirety and
replaced with the following:

 

3.                                                 Shared Risk Budget.  HMO
shall fund the Shared Risk Budget for Members, with normalized rates.  These normalized rates shall be adjusted for
PPG’s assigned Members by the age, sex and benefit plan factors as set forth in
Addendum B.  Actual Shared Risk Budget
shall fluctuate from month to month to the extent that PPG’s age, sex and
benefit plan mix fluctuates.

 

	
  Effective 3/1/03-2/29/04

  Small Group

  HMO Shared Risk Budget

  	
   

  	
  Effective
  3/1/04

  Small Group

  HMO Shared Risk Budget

  
	
  *** PMPM

  	
   

  	
  *** PMPM

  

 

6.          Addendum B to the Agreement, Section D. INDIVIDUAL HMO, Subsection 1.1 Capitation Rates shall be deleted in
its entirety and replaced with the following:

 

1.1                                           Capitation Rates.  PPG
Capitation for Individual HMO Members shall be determined on a monthly basis by
multiplying the following normalized PMPM rates by the age, sex and benefit
plan factors set forth in Addendum B for each assigned Member.  Normalized PMPM rates represent the PMPM
prior to the adjustment for PPG’s assigned Members’ age, sex and benefit
plan.  Actual PPG gross Capitation shall
fluctuate from month to month to the extent that PPG’s age, sex and benefit
plan mix fluctuates.

 

	
  Effective 3/1/03-2/29/04
Individual

  HMO Capitation

  	
   

  	
  Effective 3/1/04

  Individual

  HMO Capitation

  
	
  *** PMPM

  	
   

  	
  *** PMPM

  

 

7.          Addendum
B to the Agreement, Section D. INDIVIDUAL
HMO. Subsection 3.1 Shared
Risk Budget shall be deleted in its entirety and replaced with
the following:

 

3.1                                             Shared Risk Budget.  HMO
shall fund the Shared Risk Budget for Members, with normalized rates.  These normalized rates shall be adjusted for
PPG’s assigned Members by the age, sex and benefit plan factors as set forth in
Addendum B.  Actual Shared Risk Budget
shall fluctuate from month to month to the extent that PPG’s age, sex and
benefit plan mix fluctuates.

 

2

 

	
  Effective 3/1/03-2/29/04

  Individual

  HMO Shared Risk Budget

  	
   

  	
  Effective
  3/1/04

  Individual

  HMO Shared Risk Budget

  
	
  *** PMPM

  	
   

  	
  *** PMPM

  

 

8.          Addendum B of the Agreement, Section F. MEDICARE COB. Subsection 1. Capitation Rates shall be deleted in
its entirety and replaced with the following:

 

1.                                                     Capitation Rates.  PPG
Capitation rates for Medicare COB Members shall be at the following PMPM
levels, subject to age, sex and benefit plan factors set forth in Addendum B

 

	
  Effective 3/1/03-

  2/29/04

  Medicare COB HMO

  	
   

  	
  Effective 3/1/03-

  2/29/04

  Medicare COB POS

  	
   

  	
  Effective 3/1/04

  Medicare COB

  HMO

  	
   

  	
  Effective 3/1/04

  Medicare COB POS

  
	
  *** PMPM

  	
   

  	
  *** PMPM

  	
   

  	
  *** PMPM

  	
   

  	
  *** PMPM

  

 

9.          Addendum
B to the Agreement, Section G, COMMERCIAL
POS.  Subsection 6.1
POS Shared Risk Budgets shall
be deleted in its entirety and replaced with the following:

 

6.1                                         POS Shared Risk Budgets.  The
budgets shall be determined for each Commercial POS population: Standard POS,
Small Group POS and, at a later date, Individual POS Members.  Each Budget shall cover In-Network,
Out-of-Network and Out-of-Area Shared Risk Services.  Each of the normalized Shared Risk Budgets shall be equal to the
normalized HMO Shared Risk Budget, or institutional capitation PMPM, if
applicable, and multiplied by one hundred and five percent (105%).  Actual Shared Risk Budget shall fluctuate
from month to month to the extent that PPG’s age, sex and benefit plan mix fluctuates.

 

	
  Effective 3/1/03-

  2/29/04

  Standard

  Shared Risk
+ 5%

  	
   

  	
  Effective
  3/1/03-

  2/29/04

  Small Group

  Shared Risk
+ 5%

  	
   

  	
  Effective
  3/1/04

  Standard

  Shared Risk

  +5%

  	
   

  	
  Effective
  3/1/04

  Small Group

  Shared Risk

  + 5%

  
	
  *** + 5%

  	
   

  	
  *** + 5%

  	
   

  	
  *** + 5%

  	
   

  	
  *** + 5%

  

 

10.    Addendum B to the Agreement, Section J. Pharmacy Shared Risk Program.
subsection 1. Pharmacy Budget shall be deleted in its entirety and replaced with the following:

 

1.                   Pharmacy Budget.  Each
month HMO shall fund the Pharmacy Budget at
*** effective 3/1/03-2/29/04 and *** effective 3/1/04 per eligible
Member per month (“PEMPM”) subject to the age, sex and benefit plan factors set
forth in Addendum B.

 

11.    A new Addendum J, Health Insurance
Portability and Accountability Act of 1996 (“HIPAA”) attached
hereto is hereby added to the Agreement

 

3

 

Except as so amended, all other provisions of the Agreement shall remain
unchanged and in effect.

 

IN WITNESS WHEREOF, the parties hereto have executed this Amendment by their officers duly
authorized to be effective on the date and year first written above.

 

 

	
  A.V. Medical Group

  	
   

  	
  Health Net, Inc. Affiliates

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/ Peter G. Goll

  	
   

  	
  /s/ Jenni Vargas

  	
   

  
	
  Signature

  	
   

  	
  Jenni Vargas

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Senior Vice President

  	
   

  	
   

  	
   

  
	
  Title

  	
   

  	
  Network Management and Development Officer

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  1-17-03

  	
   

  	
  1-27-03

  	
   

  
	
  Date

  	
   

  	
  Date

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  33-086 1226

  	
   

  	
   

  	
   

  
	
  Federal Tax Identification Number

  	
   

  	
   

  	
   

  

 

4

 

ADDENDUM I

HEALTH INSURANCE PORTABILITY AND 

ACCOUNTABILITY ACT (HIPAA)

 

A.           HNI
and PPG are parties to the Agreement pursuant to which PPG provides a service
to, or performs a function on behalf of HNI and, in connection therewith, uses
or discloses Protected Health Information (“PHI”) that is subject to protection
under the Health Insurance Portability and Accountability Act of 1996
(“HIPAA”);

 

B.             Any
entity which creates or receives PHI from or on behalf of HNI is a business
associate, as defined in the HIPAA implementing privacy regulations, 45 C.F.R.
Parts 160 and 164 (“HIPAA Regulations”);

 

C.             Pursuant
to the HIPAA Regulations, all PPG’s contracted with HNI must agree in writing
to certain mandatory provisions regarding the use and disclosure of PHI; and

 

D.            The
purpose of this Addendum is to satisfy the requirements of the HIPAA
Regulations, including, but not limited to, business associate contract
requirements set forth at 45 C.F.R. § 164.504(e), as it may be amended
from time to time.

 

 

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

 

1.               Definitions.  Unless
otherwise provided in this Addendum, capitalized terms have the same meaning as
set forth in the HIPAA Regulations, 45 C.F.R. Parts 160 and 164.

 

2.               Scope
of Use and Disclosure of Protected Health Information.  Except
as otherwise limited in this Addendum. 
PPG shall use and disclose PHI solely to provide the services, or
perform the functions, described in the Agreement, provided that such use or
disclosure would not violate the HIPAA Regulations if so used or disclosed by
HNI.  PPG, to the full extent
applicable, shall ensure that its directors, officers, employees, contractors
and agents shall:

 

(A)                              Not use or further
disclose PHI other than as permitted or required by this Addendum or as
Required By Law;

 

(B)                                Implement all appropriate and reasonable
administrative, physical and technical safeguards to prevent use or disclosure
of PHI other than as provided by this Addendum;

 

(C)                                Mitigate, to the extent practicable, any
harmful effect that is known to PPG of a use or disclosure of PHI by PPG in
violation of the requirements of this Addendum;

 

(D)                               Report promptly to HNI’s designated Privacy
Officer any use or disclosure of PHI not provided for by this Addendum of which
PPG becomes aware;

 

(E)                                 Require contractors or agents to whom PPG
provides PHI received from, or created or received by PPG on behalf of, HNI, to
agree to the same restrictions and conditions that apply to PPG with respect to
such PHI under this Addendum.

 

5

 

(F)                                 Provide to HNI or, as directed by HNI, to an
Individual, in the time and manner designated by HNI, any information necessary
to allow HNI to respond timely to a request by an Individual for a copy of the
Individual’s PHI pursuant to 45 C.F.R. § 164.524; (1)

 

(G)                                Maintain for a period of six (6) years all
Designated Record Sets relating to PHI received from, or created or received by
PPG on behalf of HNI;

 

(H)                               Maintain for a period of six (6) years records
of all disclosures of PHI, other than for the purpose(s) set forth in this
Addendum, including the date, name of recipient, description of PHI disclosed
and purpose of disclosure;

 

(I)                                    Provide to HNI or, as directed by HNI, to an
Individual, in the time and manner designated by HNI, any necessary information
collected in accordance with Section 2(H) of this Addendum in order to
allow HNI to respond timely to a request by an Individual for an accounting of
the disclosures of the Individual’s PHI pursuant to 45 C.F.R.
§ 164.528;(2)

 

(J)                                   Make any amendments to PHI that HNI directs or
agrees to pursuant to 45 C.F.R. § 164.526 at the request of HNI or an
Individual in the time and manner designated by HNI; (3)

 

(K)                               Make PPG’s internal practices, books, and
records relating to the use and disclosure of PHI received from, or created or
received by PPG on behalf of, HNI available to HNI or, at the request of HNI,
to the Department of Health and Human Services (“DHHS”), in a time and manner
designated by HNI or DHHS, for purposes of determining HNI’s compliance with
the HIPAA Regulations; provided that, in all events.  PPG shall immediately notify HNI upon receipt by PPG of any
request received from DHHS relating to HNI’s compliance with the HIPAA
Regulations and shall provide HNI with copies of any materials provided to DHHS;

 

(L)                                 Upon termination of the Agreement, return or
destroy all PHI received from, or created or received by PPG on behalf of, HNI
that PPG still maintains, or which is maintained by any contractor or agents of
PPG, in any form and shall retain no copies of such PHI; provided that if such
return or destruction is not feasible, PPG shall extend the protections of this
Addendum to the PHI and limit further uses and disclosures to those purposes
that make the return or destruction of the information infeasible.  A senior officer of PPG shall certify in
writing to HNI, within five (5) days after termination, that all PHI has been
returned or destroyed as provided above and that PPG retains no copies of PHI
in any form; and

 

(M)                            Allow HNI, upon reasonable notice, to inspect
PPG’s procedures and practices with respect to compliance with the terms of
this Addendum; provided, however, that HNI has no duty to inspect and its
decision not to inspect does not relieve PPG of its compliance responsibility.

 

3.               Obligations of HNI.  To assist PPG in the proper use and
disclosure of PHI, HNI shall;

 

(A)                              Provide PPG with the notice of privacy
practices that HNI produces in accordance with 45 C.F.R. § 164.520, as
well as any changes to such notice;

 

(B)                                Provide PPG with any changes in, or revocation
of permission by an Individual to use or disclose PHI, if such changes affect
PPG’s permitted or required uses and disclosures.

 

(1) May be omitted if PPG does not have PHI in a designated record
set.  Designated record sets are records
concerning enrollment, payment, claims adjudication, and medical or case
management as well as any other records used to make a  decision about an Individual.

(2) May be omitted if PPG does not have PHI in a designated record set.

(3) May be omitted if PPG does not have PHI in a designated record set.

 

6

 

(C)                                Notify PPG of any
restriction on the use or disclosure of PHI that HNI has agreed, to in accordance with 45 C.F.R. § 164.522; and

 

(D)                               Not request PPG to use or disclose PHI in any
manner that would not be permissible under the HIPAA Regulations if the PHI
were to be so used or disclosed by HNI.(4)

 

4.               Standard
Transactions.  To the extent PPG conducts Standard
Transaction(s) on behalf of HNI, PPG shall, without limitation, comply with the
HIPAA Regulations, “Administrative Requirements for Transactions,” 45 C.F.R.
§ 162.100 et seq., by the compliance date of October 16, 2003, and
shall not: (a) Change the definition, data condition or use of a data element
or segment in a standard: (b) Add any data elements or segments to the maximum
defined data set: (c) Use any code or data elements that are either marked “not
used” in the standard’s implementation specification or are not in the
standard’s implementation specification(s); or (d) Change the meaning or intent
of the standard’s implementation specifications.(5)

 

5.               Termination
for Breach.  HNI shall have the right to terminate the
Agreement upon written notice if HNI determines that PPG has breached a material
term of the provisions of this Addendum: provided that HNI’s remedies under
this Addendum and the section(s) of the Agreement related to termination, if
any, shall be cumulative.

 

6.               Survival
of Terms.  The obligations of PPG under Sections 2(F), 2(G),
2(H), 2(I) and 2(L) of this Addendum shall survive the termination of the
Agreement.

 

7.               Injunctive
Relief.  PPG agrees that the remedies at law for any
breach by it of the terms of this Addendum shall be inadequate and that
monetary damages resulting from such breach are not readily measured.  Accordingly, in the event of a breach or
threatened breach by PPG of the terms of this Addendum, HNI shall be entitled
to immediate injunctive relief.

 

Nothing herein shall prohibit HNI from pursuing any other remedies
available to it for such breach, and HNI’s rights under this Addendum and the
sections of the Agreement related to injunctive relief, if any, shall be
cumulative.

 

8.               Amendment
of Agreement.  In the event of a material change in the
HIPAA Regulations or state law affecting the use or disclosure of PHI, HNI may
amend this Addendum and the Agreement as necessary to comply with the change in
the law or regulation and such amendment shall become effective sixty (60) days
after receipt by PPG.  HNI’s rights
under this Addendum and the section(s) of the Agreement related to amendments,
if any, shall be cumulative.

 

9.               Notice
of Investigation or Lawsuit and Indemnification.  PPG
shall notify HNI immediately upon receipt of notice of an investigation or of a
lawsuit filed against PPG related to or arising from the use or disclosure of
PHI by PPG pursuant to this Addendum. 
Any indemnification provision in the Agreement shall apply to PPG’s and
HNI’s use and disclosure of PHI under this Addendum.

 

10.         Confidentiality. 
Notwithstanding the foregoing, PHI shall not be included within the
definition of “confidential information” in the section(s) of the Agreement
related to protection of confidential information, if any, as PPG’s obligations
with respect to PHI are set forth in this Addendum.

 

11.         State Law Requirements.  To
the extent that state law is more stringent than the HIPAA Regulations, any use
or disclosure of PHI by PPG shall be made in accordance with state law.

 

(4) If the Agreement provides for the use of PHI for purposes of data
aggregation or management and administrative activities of PPG add the
following language to the end of this provision: “unless such use or disclosure
is necessary for the purposes of data aggregation or management and administrative
activities of PPG under the Agreement.”

(5) May be omitted if there is no electronic data transaction by PPG.

 

7

 

12.         Interpretation. 
Any-ambiguity in this Addendum shall be resolved in favor of a meaning
that permits HNI to comply with the HIPAA Regulations.

 

13.         Effective Dale. 
Except as otherwise provided above, this Addendum is effective on the
date of execution as set forth above, except for Sections 2(E) through 2(J)
which shall be effective on April 14, 2003.

 

8

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