CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO THE REGISTRANT IF PUBLICLY DISCLOSED. [***] INDICATES THAT INFORMATION HAS BEEN REDACTED.
CONFIDENTIAL
EXECUTION
Exhibit 10.3
SERVICES AGREEMENT
between
MEDNAX SERVICES, INC.
and
R1 RCM INC.
SERVICES AGREEMENT
This Services Agreement is entered into on May 12, 2021, and will be effective as of May 1, 2021 (the “Effective Date”), between Mednax Services, Inc. (“Client”), and R1 RCM Inc. (“R1”). Client and R1 are each sometimes referred to herein as a “Party”, and collectively, the “Parties.”
RECITALS
WHEREAS, Client desires to procure from R1, and R1 desires to provide to Client and the Service Recipients, revenue cycle management and related services through an outsourced model; and
WHEREAS, Client and R1 have engaged in negotiations, discussions and due diligence that have culminated in the formation of the contractual relationship described in this Services Agreement.
AGREEMENT
NOW THEREFORE, in consideration of the mutual promises and covenants contained herein, and for other good and valid consideration, the receipt and sufficiency of which are hereby acknowledged, and incorporating the recitals above, the Parties hereby agree as follows:
“Adverse Judgment” means an adverse judgment, injunction, order, or decision made against a Party (or, in regards to Client, a Service Recipient) by a domestic or foreign national, state, county, municipal, local, territorial, or other government body, authority, department, agency, court, official or public or statutory person of competent jurisdiction.
“Affiliate” means, with respect to a legal person, any entity at any time Controlling, Controlled by or under common Control with such legal person.
“Aggregate In-Scope Base Year Cash” means, at any point in time, the sum total Fixed Individual Base Year Cash values of all then-currently existing Service Recipients receiving Services hereunder, as such values are to be set forth on Exhibit 3.6 on or prior to the Finalization Date (as defined in Exhibit 11.1-A). [***]
“Applicable Law” means any applicable declaration, decree, directive, order, ordinance, law, restriction, regulation or rule of or by any Governmental Authority, including the provisions of 42 U.S.C. §§ 1320d through 1320d-8 and 42 C.F.R. §§ 160, 162 and 164, which are commonly referred to as “HIPAA” and Title XIII of the American Recovery and Reinvestment Act of 2009, Pub. L. No. 111-5(2009), commonly referred to as the “HITECH Act”, and the rules of all applicable regulatory agencies with jurisdiction over Client or any Service Recipient (including, but not limited to, the Center for Medicare and Medicaid Services (“CMS”)).
“Base Fee” has the meaning given in Exhibit 11.1-A.
“Baseline Cash” means the sum total of all Fixed Individual Base Year Cash values for all Service Recipient Entities as of the Effective Date, to be set forth on Exhibit 3.6 on or prior to the Finalization Date. The Baseline Cash is [***].
“Cash Collections” means the amounts adjudicated and posted against individual patient accounts as payments or posted to unapplied cash accounts through the provision of in-scope Services. The primary source of payment for in-scope Services is payments from third-party payors. In the event that collections related to specific patient activity are not posted/adjudicated at the patient account level, these payments are also included as part of Cash
Collections (e.g., lump-sum underpayment settlements or take-backs). For payors that have periodic interim payments, vouchered remittances will be considered cash.
“Client Competitors” means [***].
“Client Consents” means all licenses, consents, permits, approvals and authorizations that are necessary to allow R1 and R1 Contractors to access and (a) use Authorized Space, Retained Systems, and other Client assets as provided in Article VII, (b) use the services provided for the benefit of Client under the In-Scope Agreements or third-party software licenses, or (c) use the Client Intellectual Property, all to the extent necessary for R1 to perform the Services.
“Client Data” means all data submitted, directly or indirectly, to R1 by Service Recipients or patients, or obtained or learned by R1 in connection with the Services provided by R1, including PHI; provided, however, that Client Data does not include (a) R1’s proprietary algorithms, methodologies and processes or (b) information or data created by R1 to support its operations (e.g., to create R1 financial, business or other business records).
“Control” and its derivatives means: (a) the legal, beneficial, or equitable ownership, directly or indirectly, of (i) at least fifty percent (50%) of the aggregate of all voting equity interest in an entity or (ii) equity interest having the right to at least fifty percent (50%) of the profits of an entity or, in the event of dissolution, to at least fifty percent (50%) of the assets of an entity; (b) the right to appoint, directly or indirectly, a majority of the board of directors of the entity; (c) the right to control, directly or indirectly, the management or direction of the entity by contract or corporate governance document; or (d) in the case of a partnership, the holding by an entity (or one of its Affiliates) of the position of sole general partner.
“Designated Employees” has the meaning given in Exhibit 10.1.
“Employment Effective Date” has the meaning given in Exhibit 10.1.
“Federal Health Care Program” means any plan or program providing health care benefits, whether directly through insurance or otherwise, that is funded directly, in whole or part, by the United States Government (other than the Federal Employees Health Benefits Program), including any State health care program that receives funding from the United States Government.
“Fixed Individual Base Year Cash” means, for each Service Recipient, (a) for any Service Recipient existing as of the Effective Date, the Cash Collections associated with such Service Recipient during the Baseline Year, to be set forth on Exhibit 3.6 on or prior to the Finalization Date, or (b) for any Service Recipient added by Client pursuant to Section 5.1, the Cash Collections for the Acquired Service Recipient in the [***], as added to Exhibit 3.6 by amendment thereof; provided, however, that the Parties may agree [***].
“Governmental Approvals” means all licenses, consents, permits, approvals and authorizations from any Governmental Authority, or any notice to any Governmental Authority, that are required by Applicable Law, including any regulatory framework to which Client or any Service Recipient is required to submit or voluntarily submits from time to time, for the consummation of the transactions contemplated by this Agreement.
“Governmental Authority” means any federal, state, municipal, local, territorial or other governmental department, regulatory authority, judicial or administrative body, whether domestic, foreign or international with jurisdiction over the Parties.
“Implementation Plan” means the initial, non-binding implementation plan providing a high-level overview of the transition of the Services to R1.
“Improvement Fee” has the meaning given in Exhibit 11.1-B.
“In-Scope Specialty Field” means the women’s and children’s specialty field.
“Intellectual Property” means the Client Intellectual Property or the R1 Intellectual Property, as the context requires.
“Intellectual Property Rights” means any and all intellectual property rights anywhere in the world, including (a) patents and patent applications; (b) trademarks, service marks, and all registrations and applications for registration thereof; (c) copyrights and all registrations and applications for registration thereof; (d) trade secrets, know-how and confidential information; (e) internet domain name registrations; (f) all inventions (whether patentable or unpatentable and whether or not reduced to practice), and all improvements thereto; and (g) all copies and tangible embodiments of the foregoing (in whatever form or medium).
“Material Adverse Effect” means any change, event or effect that, when taken individually or together with all other related adverse changes, events or effects, has had or would reasonably be expected to have a material adverse effect on the business, properties, assets, results of operations or condition, financially or otherwise, taken as a whole, of a Party; provided, however, that a “Material Adverse Effect” shall not include any change or effect: (a) in general economic or business conditions; (b) in financial, banking or securities markets of the U.S. in general (including any disruption thereof and any decline in the price of any security or any market index); (c) in national or international political or social conditions, including the engagement by the U.S. in hostilities, whether or not pursuant to the declaration of a national emergency or war, or the occurrence of any military or terrorist attack upon the U.S. or any of its territories, possessions or diplomatic or consular offices or upon any military installation, equipment or personnel of the U.S.; (d) affecting generally the industries or markets in which such Party operates; (e) related solely to the announcement or consummation of the matters contemplated by this Services Agreement; (f) resulting from the identity or business plans of such Party or any of its Affiliates; (g) resulting from any act taken by such Party in accordance with this Services Agreement; (h) resulting from changes in Applicable Law; or (i) resulting from changes in reimbursement rates, including but not limited to changes in any reimbursement policies or fee schedules by Federal Health Care Programs.
“Phase 1 Services” has the meaning given in Exhibit 3.1.
“Phase 2 Services” means front end services for office-based Service Recipients, as further described in Exhibit 3.1.
“R1 Competitor” means [***].
“R1 Consents” means all licenses, consents, permits, approvals and authorizations that are necessary to allow (a) R1 and R1 Contractors to use the R1 Technology, R1 Intellectual Property Software and any assets owned or leased by R1, and (b) R1 and R1 Contractors to (i) use any third-party services retained by R1 to provide the Services during the Term, (ii) grant the licenses contemplated by Article VI and Article XIII and (iii) assign to Client the Client Deliverables.
“R1 Contractors” means a third party engaged by R1 to perform a portion of the Services on R1’s behalf, excluding any third-party vendors who indirectly support the Services or who provide general operational, administrative, technical or similar services for R1’s business, even though they may support R1’s provision of the Services.
“R1 Technology” means the proprietary software applications, including source code, APIs (application programming interfaces), automated functionality, portals, design, data structures, services, objects and any documentation, reports or other materials or business methods used by R1 in providing the Services.
“Service Recipient” means all clinicians or clinician groups who are (a) owned or employed by Client or its Affiliate, or (b) receiving revenue cycle services from Client or its Affiliate pursuant to contractual agreements between such groups and Client or its Affiliate (e.g., under a management services agreement). Unless otherwise set forth herein or otherwise derived from context, Service Recipient shall mean only those clinicians and clinician groups receiving Services hereunder.
“Service Recipient Entity” means [***].
“Similar Services” means [***].
“Transitioned Employees” has the meaning given in Exhibit 10.1.
Exhibit 3.1 Services
Exhibit 3.4 R1 Contractors
Exhibit 3.5 Service Levels
Exhibit 3.15 In-Flight Projects
Exhibit 4.1 Initial Implementation Timeline
Exhibit 10.1 Designated Employee Terms
Exhibit 10.2 Key Personnel
Exhibit 11.1 Charges for Services
Exhibit 11.1-A Base Fee
Exhibit 11.1-B Improvement Fees for Services
Exhibit 12.1 In-Scope Agreements
Exhibit 14.1 Information Security Requirements
Exhibit 22.1 Disaster Recovery Requirements
The process set forth in Section 20.4(d) is collectively referred to as the “Workaround Period”. Nothing in this Section 20.4 will negate, limit, or affect any right of termination under any other Section of this Services Agreement.
R1 RCM Inc. Attention: Joseph Flanagan, President and CEO 401 N. Michigan, Suite 630 Chicago, Illinois 60611
| Mednax Services, Inc. Attention: General Counsel 1301 Concord Terrace Sunrise, FL 33323
|
With a copy to: R1 RCM Inc. Attention: General Counsel 401 N. Michigan, Suite 630 Chicago, Illinois 60611 | With a copy to: Attention: COO, Revenue Cycle Management 1301 Concord Terrace Sunrise, FL 33323
|
[Remainder of Page Intentionally Left Blank]
Agreed to and Accepted by:
R1 RCM Inc. By: /s/ Vijay Kotte Name: Vijay Kotte Its: Chief Solutions Officer | Mednax Services, Inc. By: /s/ C. Marc Richards Name: C. Marc Richards Its: Chief Financial Officer |