Exhibit 10.1
HEALTH SERVICES AGREEMENT
BY AND BETWEEN
RIO GRANDE HMO, INC.
AND
LIFEMARK OF TEXAS, INC,
This HEALTH SERVICES AGREEMENT ("Agreement") is entered into by and between Rio
Grande HMO, Inc. d/b/a HMO Blue(R), Southeast Texas, a health maintenance
organization certified under Article 20A of the Insurance Code of the State of
Texas (hereinafter referred to as "HMO"), and Lifemark of Texas, Inc. a
nonprofit health corporation certified under Section 5.01(a) of the Texas
Medical Practice Act (hereinafter referred to as "Lifemark Texas").
1 PREAMBLE
HMO is engaged in the development, management and operation of a health
maintenance organization, one of whose purposes is to provide or arrange
for comprehensive health care on a prepaid basis for Medicaid recipients.
HMO desires to engage the services of Lifemark Texas in the Medicaid
program. Lifemark Texas desires to participate in the HMO's health service
delivery system and directly provide or arrange health care services to
Medicaid recipients who have selected the HMO, and to provide certain
administrative services to HMO.
Now, therefore, in consideration of the mutual promises herein stated, it
is agreed by and between the parties hereto as follows:
2 DEFINITIONS
The following terms will have the meanings for purposes of this Agreement,
as set forth below:
2.1 "AGREEMENT" means this contract, including all attachments appended hereto
and any written amendments subsequently executed by the parties.
2.2 "CLEAN CLAIM" means a TDHS approved or identified claim format that
contains all data fields required by HMO and TDHS for final adjudication
of the claim. The required data fields must be complete and accurate and
include HMO-published requirements for adjudication.
2.3 "CONTRACT YEAR" means September 1 of the current year through August 31 of
the following year or as otherwise defined by the Texas Department of
Human Services for a particular service area or service area expansion.
2.4 "COVERED SERVICES" means those health care services or products, including
medical, dental, vision, behavioral, approved home and community based
care, and other services to which Members are entitled under the Program
as described in the RFA, the TDHS Contract and value-added services as
described in the HMO's response to the RFA dated April 7, 1997.
2.5 "DESIGNATED MEMBERS" means those Members who have selected, or been
assigned to, participating Providers to be those Members' Primary Care
Physicians.
2
2.6 "EMERGENCY MEDICAL CONDITION" means a medical condition manifesting itself
by acute symptoms of sufficient severity (including severe pain), such
that a prudent layperson who possesses an average knowledge of health and
medicine could reasonably expect the absence of immediate medical care
could result in:
(a) placing the patient's health in serious jeopardy;
(b) serious impairment to bodily functions;
(c) serious dysfunction of any bodily organ or part;
(d) serious disfigurement; or
(e) in the case of a pregnant woman, serious jeopardy to the health of
the fetus.
2.7 "EMERGENCY SERVICES" means Covered Services that are furnished by a
Provider that is qualified to furnish such services under this Agreement
and are needed to evaluate or stabilize an Emergency Medical Condition
and/or emergency behavioral health condition.
2.8 "EPSDT" means the Early and Periodic Screening, Diagnosis, and Treatment
program contained at 42 United States Code 1396d(r). The name has been
changed to "Texas Health Steps" in the State of Texas.
2.9 "EPSDT-CCP" means the Early and Periodic Screening, Diagnosis, and
Treatment -- Comprehensive Care Program, under which TDH added
comprehensive care benefits to the federal EPSDT (Texas Health Steps)
program requirements.
2.10 "HCFA" means the Health Care Financing Administration.
2.11 "HEALTH CARE PROFESSIONAL" means any physician, nurse, audiologist,
physician assistant, clinical psychologist, occupational therapist,
physical therapist, speech and language pathologist, and other
professional engaged in the delivery of health services who is licensed,
practices under an institutional license, certified, or practices under
authority of a physician or legally constituted professional association
or other authority consistent with State law to render services to Members
pursuant to an agreement with HMO or Lifemark Texas.
2.12 "INSTITUTIONAL SERVICES" means those non-professional Covered Services
provided by or through a State licensed or Medicare/Medicaid certified
facility. Such services include, but are not limited to: inpatient or
outpatient hospital services, skilled nursing facility services, and
emergency room services.
2.13 "MEDICAL DIRECTOR" means a physician designated by HMO who is responsible
for monitoring the provision of Covered Services to Members.
2.14 "MEDICALLY NECESSARY" means those services or supplies specified in the
TDHS Contract which are:
3
(a) reasonable and necessary to prevent illnesses or medical conditions,
or provide early screening, interventions, and/or treatments for
conditions that cause suffering or pain, cause physical deformity or
limitations in function, threaten to cause or worsen a handicap, cause
illness or infirmity of a Member, or endanger life;
(b) provided at appropriate facilities and at the appropriate levels of
care for treatment of a Member's medical conditions;
(c) consistent with health care practice guidelines and standards that are
issued by professionally recognized health care organizations or
governmental agencies;
(d) consistent with the diagnoses of the conditions; and
(e) no more intrusive or restrictive than necessary to provide a proper
balance of safety, effectiveness, and efficiency.
2.15 MEDICALLY NECESSARY BEHAVIORAL HEALTH SERVICES" means those behavioral
health services which:
(a) are reasonable and necessary for the diagnosis or treatment of a
mental health or chemical dependency disorder or to improve or to maintain
or to prevent deterioration of functioning resulting from such a disorder;
(b) are in accordance with professionally accepted clinical guidelines and
standards of practice in behavioral health care;
(c) are furnished in the most appropriate and least restrictive setting in
which services can be safely provided;
(d) are the most appropriate level of supply or service which can safely
be provided; and
(e) could not be omitted without adversely affecting the Member's mental
and/or physician health or the quality of care rendered.
2.16 "MEMBER" means any person residing in the service enrollment area who is:
(1) entitled to benefits under Title XIX of the Social Security Act and
the Texas Medical Assistance Program (Medicaid);
(2) in a Medicaid eligibility category included in the Program;
(3) enrolled in the Program; and
(4) enrolled with HMO.
4
2.17 "PARTICIPATING PROVIDER" means any health care facility or Health Care
Professional that renders Covered Services to Members pursuant to an
agreement with HMO or Lifemark Texas.
2.18 "PRIMARY CARE PHYSICIAN OR PROVIDER" means a Participating Provider who
has further agreed to provide to Designated Members a medical home, and
who is responsible for providing initial and primary care to patients,
maintaining the continuity of patient care, and initiating referral for
care.
2.19 "PROVIDER" means an individual or entity and its employees and
subcontractors that directly provide health care services to HMO's Members
under a TDHS Medicaid managed care program.
2.20 "PROGRAM" means the State of Texas STAR+PLUS Program for the provision of
medical, dental, vision, behavioral, approved home and community based,
and other health services to Medicaid recipients in a managed care
delivery setting as described in the STAR+PLUS portion of the Request For
Application by the Texas Department of Health, dated January 7, 1997, and
the TDHS Contract.
2.21 "REQUEST FOR APPLICATION" or "RFA" shall mean the TDH/TDHS Request for
Application for the Program dated January 7, 1997 and any amendments
thereto.
2.22 "REVENUE" means the monthly payments and all subsequent adjustment
payments made to HMO under the TDHS Contract.
2.23 "SPECIALIST PHYSICIAN" means a physician who is a Participating Provider
and who agrees to directly provide Covered Services to Designated Members
upon the referral by any Primary Care Physician.
2.24 "STATE" means the State of Texas.
2.25 "TDH" means the Texas Department of Health.
2.26 "TDHS" shall mean the Texas Department of Human Services.
2.27 "TDHS CONTRACT" means the agreement between HMO and TDHS specifying the
terms and conditions under which Covered Services are to be provided to
Members pursuant to the Program, and any of its written amendments,
corrections or modifications.
2.28 "TDI" means the Texas Department of Insurance.
2.29 "TDMHMR" means the Texas Department of Mental Health and Mental
Retardation.
5
2.30 "THHSC" means the Texas Department of Health and Human Services.
2.31 "THIRD PARTY LIABILITY" means benefits paid or payable by all other
federal or State medical care programs that are primary to Medicaid, group
or individual insurance (including the insurance of absent spouses or
parents who may have insurance to pay medical care for spouses or minor
Members, and auto or casualty insurance collections, subject to limitation
pursuant to State law).
3 OBLIGATIONS OF HMO
3.1 GENERAL. HMO shall maintain the organizational and administrative capacity
and capabilities to carry out duties and responsibilities under the TDHS
Contract.
3.2 FISCAL SOLVENCY. HMO is and shall remain in full compliance with all State
and federal solvency requirements for HMOs, including but not limited to,
all reserve requirements, net worth standards, debt to equity ratios or
other debt limitations.
3.3 INSURANCE. HMO has obtained and shall maintain the insurance coverages as
required by the TDHS Contract.
3.4 COMPLIANCE. HMO shall comply with all State and federal laws and
regulations relating to the Texas Medicaid Program which have not been
waived by HCFA. HMO shall comply with all rules relating to the Medicaid
Managed Care Program adopted by TDHS, TDI, TDH, THHSC, TDMHMR any other
state agency delegated authority to operate or administer Medicaid or
Medicaid Managed Care Programs.
4 ACCOUNTABILITY, DELEGATION AND OVERSIGHT.
4.1 ACCOUNTABILITY. HMO is and shall remain responsible for performing all
duties, responsibilities and services under the TDHS Contract regardless
of whether the duty, responsibility or service is subcontracted or
delegated to Lifemark Texas under this Agreement.
4.2 SUBCONTRACT/DELEGATION. HMO has subcontracted and/or delegated to Lifemark
Texas, and Lifemark Texas shall perform, those duties, responsibilities
and services (collectively, "Activities") which are specified in this
Agreement. Lifemark Texas shall not further subcontract or delegate the
performance of these Activities to any organization or entity without the
prior written consent of HMO. Any such subcontract or delegation agreement
shall be approved by HMO, and TDHS if deemed necessary under regulatory or
TDHS Contract requirements, and attached as an addendum to this Agreement.
6
4.3 OVERSIGHT. Lifemark Texas shall comply with all HMO standards and
requirements applicable to the Activities, and Lifemark Texas's policies
and procedures for performing the Activities shall be consistent with
HMO's policies and procedures. If Lifemark Texas's policies and procedures
are inconsistent with the HMO's, the HMO's policies and procedures shall
apply.
4.4 MAINTENANCE OF INFORMATION AND RECORDS. Lifemark Texas shall maintain all
records reviewed or created in connection with performing the Activities
in a form acceptable to HMO, provide HMO with access to such information
and records, and permit HMO to review and copy such information and
records, in accordance with the requirements of State and federal law.
Lifemark Texas shall create, keep and maintain records in accordance with
TDHS Contract Section 3.5 and other requirements as specified by federal
or State laws or regulations.
4.5 REPORTING OBLIGATIONS. Lifemark Texas shall provide HMO with periodic
written reports regarding all Activities in the formats specified by HMO
for each of the Activities. Lifemark Texas shall disclose, and shall
require network Providers to disclose, to HMO all pending or potential
arbitration, litigation or administrative actions against Lifemark Texas
or the network Provider prior to the execution of this Agreement, and
within seven (7) days of receiving service or becoming aware of threatened
litigation during the term of the Agreement.
4.6 MONITORING/AUDITS. HMO shall oversee Lifemark Texas's performance of the
Activities through review of periodic written reports provided by Lifemark
Texas as described above, meetings with appropriate Lifemark Texas
representatives, and onsite audits and assessments of Lifemark Texas.
Lifemark Texas shall cooperate, participate and comply with HMO in such
monitoring and audits. Such audits and assessments shall be performed in
accordance with requirements of State and federal law. Without limiting
the foregoing, Lifemark Texas agrees that contracts with Participating
Providers shall permit Lifemark Texas to disclose to HMO its Participating
Providers credentialing files. Lifemark Texas agrees that TDHS, TDI or
their designee have the right from time to time to examine and audit the
books of Lifemark Texas and its subcontractors relating to: 1) capacity to
bear the risk of potential financial losses; 2) services performed or
determination of amounts payable under the TDHS Contract; 3) detection of
fraud and abuse; and 4) other purposes TDHS deems necessary to perform its
regulatory function and/or to enforce the provisions of the TDHS Contract
or other requirements as specified by federal or State laws or
regulations.
4.7 LIFEMARK TEXAS COVENANTS - NONPROVIDER SERVICES. Lifemark Texas agrees to
the following covenants, and agrees to include such covenants in any
subcontract for nonProvider services:
7
4.7.1 Lifemark Texas understands that services provided under this
contract are funded by State and federal funds under the Texas
Medical Assistance Program (Medicaid). Lifemark Texas is subject to
all State and federal laws, rules and regulations that apply to
persons or entities receiving State and federal funds. Lifemark
Texas understands that any violation by Lifemark Texas of a State or
federal law relating to the delivery of services under this
Agreement, or any violation of the TDHS Contract could result in
liability for contract money damages, and/or civil criminal
penalties and sanctions under State and federal law.
4.7.2 Lifemark Texas understands and agrees that the HMO has the sole
responsibility for payment of services rendered by the Lifemark
Texas under this Agreement. In the event of HMO insolvency or
cessation of operations, Lifemark Texas's sole recourse is against
the HMO through the bankruptcy or receivership estate of the HMO.
4.7.3 Lifemark Texas understands and agrees that TDHS is not liable or
responsible for payment for any services provided under this
Agreement.
4.7.4 Lifemark Texas agrees that any modification, addition, or deletion
of the provisions of this Agreement will become effective no earlier
than 30 days after the HMO notifies TDHS of the change. If TDHS does
not provide written approval within 30 days from receipt of
notification from the HMO, changes may be considered provisionally
approved.
4.8 This Agreement is subject to State and federal fraud and abuse statutes.
Lifemark Texas is subject to State and federal fraud and abuse statutes.
Lifemark Texas will be required to cooperate in the investigation and
prosecution of any suspected fraud or abuse, and must provide any and all
requested originals and copies of records and information, free of charge
on request, to any State or federal agency with authority to investigate
fraud and abuse in the Medicaid program.
The Texas Medicaid Fraud Control Unit must be allowed to conduct private
interviews of Lifemark Texas personnel, subcontractors and their
personnel, witnesses, and patients. Requests for information are to be
complied with, in the form and the language requested. Lifemark Texas, its
employees and subcontractors and their employees and contractors must
cooperate fully in making themselves available in person for interviews,
consultation, grand jury proceedings, pretrial conference, hearings, trial
and in any other process, including investigations. Compliance with this
covenant shall be a shared expense of HMO and Lifemark Texas and shall not
be charged to the Program.
4.9 LIFEMARK TEXAS COVENANTS - PROVIDER SERVICES. Lifemark Texas agrees to the
following covenants, and agrees to include such covenants in any contract
for Provider services:
8
4.9.1 Lifemark Texas is being contracted to deliver Medicaid managed care
under the TDHS STAR+PLUS program. HMO must provide copies of the
TDHS Contract to the Lifemark Texas upon request. Lifemark Texas
understands that services provided under this contract are funded by
State and federal funds under the Medicaid program. Lifemark Texas
is subject to all state and federal laws, rules, regulations that
apply to all persons or entities receiving state and federal funds.
Lifemark Texas understands that any violation by a Provider of State
or federal law relating to the delivery of services by the Provider
under this Agreement, or any violation of the TDHS Contract could
result in liability for money damages, and/or civil criminal
penalties and sanctions under state and/or federal law.
4.9.2 Lifemark Texas understands and agrees that HMO has the sole
responsibility for payment of covered services rendered by the
Provider under this Agreement. In the event of HMO insolvency or
cessation of operations, Lifemark Texas's sole recourse is against
HMO through the bankruptcy, conservatorship, or receivership estate
of HMO.
4.9.3 Lifemark Texas understands and agrees TDHS is not liable or
responsible for payment for any Medicaid covered services provided
to mandatory Member under this Agreement. Federal and State laws
provide severe penalties for any Provider who attempts to collect
any payment from or bill a Medicaid recipient for a Covered Service.
4.9.4 Lifemark Texas agrees that any modification, addition, or deletion
of the provisions of this Agreement will become effective no earlier
than 30 days after HMO notifies TDHS of the change in writing. If
TDHS does not provide written approval within 30 days from receipt
of notification from HMO, changes can be considered provisionally
approved, and will become effective. Modifications, additions or
deletions which are required by TDHS or by changes in State or
federal law are effective immediately.
4.9.5 This contract is subject to all State and federal laws and
regulations relating to fraud and abuse in health care and the
Medicaid program. Lifemark Texas must cooperate and assist TDHS and
any State or federal agency that is charged with the duty of
identifying, investigating, sanctioning or prosecuting suspected
fraud and abuse. Lifemark Texas must provide originals and/or copies
of any and all information, allow access to premises and provide
records to TDHS or its authorized agent(s), THHSC, HCFA, the U.S.
Department of Health and Human Services, FBI, TDI, and the Texas
Attorney General's Medicaid Fraud Control Unit, upon request, and
free-of-charge. Lifemark Texas must report any suspected fraud or
abuse including any suspected fraud and abuse committed by HMO or a
Medicaid recipient to TDHS for referral to THHSC.
4.9.6 Lifemark Texas is required to submit proxy claims or encounter forms
to HMO for services provided to all STAR+PLUS Members that are
capitated by HMO in accordance with the encounter data submissions
requirements established by HMO and TDHS.
9
4.9.7 HMO is prohibited from imposing restrictions upon the Lifemark
Texas' free communication with Members about a Member's medical
conditions, treatment options, HMO referral policies, and other
HMO policies, including financial incentives or arrangements and all
STAR+PLUS managed care plans with whom Lifemark Texas contracts.
4.9.8 The Texas Medicaid Fraud Control Unit must be allowed to conduct
private interviews of Lifemark Texas and the Lifemark Texas's
employees, contractors, and patients. Requests for information must
be complied with, in the form and language requested. Lifemark Texas
and their employees and contractors must cooperate fully in making
themselves available in person for interviews, consultation, grand
jury proceedings, pre-trial conference, hearings, trial and in any
other process, including investigations. Compliance with this
covenant is at Lifemark Texas's own expense.
4.10 COMPLIANCE. Lifemark Texas must comply, and shall require its network
Providers and subcontractors to comply, with all State and federal laws
and regulations relating to the Texas Medicaid program, all rules relating
to the Medicaid Managed Care program adopted by TDHS, TDI, TDH, THHSC,
TDMHMR and any other State agency delegated authority to operate Medicaid
or Medicaid Managed Care programs, and the TDHS Contract. Lifemark Texas,
its network Providers and subcontractors shall comply with the provisions
of the Clean Air Act and the Federal Water Pollution Control Act, as
amended. To the extent required by Federal or State law, Lifemark Texas
shall prepare and implement an affirmative action program. Lifemark Texas
agrees to buy Texas products and services when they are available at a
comparable price and a comparable period of time, as required by Section
48 of Article IX of the General Appropriations Act of 1995. Lifemark Texas
shall comply with Section 5.9 of the TDHS Contract, if applicable.
4.11 PROGRAM INTEGRITY. Lifemark Texas has not been excluded, debarred, or
suspended from participation in any program under Title XVII or Title XIX
under any of the provisions of section 1128(a) or (b) of the Social
Security Act (42 USC Section 1320 a-7), or Executive Order 12549. Lifemark
Texas must notify HMO within 3 days of the time it receives notice that
any action being taken against Lifemark Texas or any person defined under
the provision of section 1128 (a) or (b) or any subcontractor, which could
result in exclusion, debarment or suspension of Lifemark Texas or a
subcontractor from the Medicaid program, or any program listed in
Executive Order 12549.
4.12 FRAUD CONTROL. Lifemark Texas must submit to HMO within sixty (60) days
after the effective date of this Agreement a copy of the Lifemark Texas's
fraud control program. Lifemark Texas's fraud control program must contain
the same standards and requirements as the HMO's fraud and abuse
compliance plan as required by the TDHS Contract, Section 5.3. HMO
acknowledges that Lifemark Texas has submitted a fraud control plan to
HMO.
10
4.13 SAFEGUARDING INFORMATION.
4.13.1All Member information, records and data collected or provided to
Lifemark Texas by HMO, TDHS or another State agency is protected
from disclosure by State and federal law and regulations. Lifemark
Texas may only receive and disclose information which is directly
related to establishing eligibility, providing services and
conducting or assisting in the investigation and prosecution of
civil and criminal proceedings under State or federal law.
4.13.2Lifemark Texas shall be responsible for informing Members and
providers regarding the provisions of 42 CFR 431, Subpart F,
relating to Safeguarding Information on Applicants and Recipients,
and Lifemark Texas must ensure that confidential information is
protected from disclosure except for authorized purposes.
4.13.3Lifemark Texas must assist network in policies for protecting the
confidentiality of AIDS and HIV-related medical information and an
anti-discrimination policy for employees and Members with
communicable diseases in compliance with Health and Safety Code,
Chapter 85, Subchapter E. relating to the Duties of State Agencies
and State Contractors.
4.13.4Lifemark Texas must require that Participating Physicians and
Participating Providers have mechanisms in place to ensure Member's
(including minor's) confidentiality for family planning services.
4.14 NON-DISCRIMINATION.
Lifemark Texas agrees to comply with, and to include in all subcontracts a
provision that the subcontractor will comply with, each of the following
requirements:
4.14.1Title VI of the Civil Rights Act of 1964, Section 504 of the
Rehabilitation Act of 1973, the Americans with Disabilities Act of
1990, and all requirements imposed by the regulations implementing
these acts and all amendments to the laws and regulations. The
regulations provide in part that no person in the United States
shall, on the grounds of race, color, national origin, sex, age,
disability, political beliefs or religion, be excluded from
participation in, or denied, any aid, care, service or other
benefits, or be subjected to any discrimination under any program or
activity receiving federal funds.
4.14.2Texas Health and Safety Code Section 85.113 (relating to workplace
and confidentiality guidelines regarding AIDS and HIV).
4.14.3The provisions of Executive Order 11246, as amended by 11375,
relating to Equal Employment Opportunity.
11
4.15 HISTORICALLY UNDERUTILIZED BUSINESSES (HUBS).
4.15.1TDHS is committed to providing procurement and contracting
opportunities to historically underutilized businesses (HUBs), under
the provisions of Texas Government Code, Title 10, Subtitle D,
Chapter 2161 and 1 TAC Section 111.11(b) and 111.13(c)(7). Lifemark
Texas is required to make a good faith effort to assist HUBs in
receiving a portion of the total contract value of this Agreement.
4.16 REQUEST FOR PUBLIC INFORMATION.
4.16.1This Agreement and all network Provider and subcontractor contracts
are subject to public disclosure under the Public Information Act
(Texas Government Code, Chapter 552). TDHS may receive Public
Information requests related to the TDHS Contract, information
submitted as part of the compliance of the TDHS Contract and the
HMO's application upon which the TDHS Contract was awarded.
4.16.2TDHS may, in its sole discretion, request a decision from the
Office of the Attorney General (AG opinion) regarding whether the
information requested is excepted from required public disclosure.
TDHS may rely on the HMO's written representations in preparing any
AG opinion request, in accordance with Texas Government Code Section
552.305. TDHS is not liable for failing to request an AG opinion or
for releasing information which is not deemed confidential by law,
if the HMO fails to provide TDHS with specific reasons why the
requested information is exempt from the required public disclosure.
TDHS or the Office of the Attorney General will notify all
interested parties if an AG opinion is requested.
4.16.3If Lifemark Texas believes that the requested information qualifies
as a trade secret or as commercial or financial information,
Lifemark Texas must notify HMO within two (2) working days of
Lifemark Texas's receipt of the request of the specific text, or
portion of text, which Lifemark Texas claims is excepted from
required public disclosure. The Lifemark Texas is required to
identify the specific provisions of the Public Information Act which
the Lifemark Texas believes are applicable, and is required to
include a detailed written explanation of how the exceptions apply
to the specific information identified by the Lifemark Texas as
confidential and excepted from required public disclosure.
4.17 NOTICE AND APPEAL.
4.17.1For acute care services, Lifemark Texas must comply with the notice
requirements contained in 25 TAC Section 36.21, and the maintaining
benefits and services contained in 25 TAC Section 36.22, whenever
the HMO or Lifemark Texas intends to take an action affecting the
Member benefits and services under the TDHS Contract and the Member
appeal requirements contained in Article 8.7 of the TDHS Contract.
12
4.17.2For Long Term Care services, Lifemark Texas must comply with the
notice requirements contained in 40 TAC, Section 79.1204, and the
appeal requirements of 40 TAC ch.79, whenever HMO or Lifemark Texas
intends to take an adverse action affecting Member benefits and
services under this Contract. Lifemark Texas agrees to provide
information regarding fair hearings to TDHS within fifteen (15) days
of the date of appeal and agrees to provide a Lifemark Texas staff
member to represent HMO and Lifemark Texas at the hearing. Lifemark
Texas shall comply with the Member appeal requirements containing in
paragraph 8.7 of the TDHS Contract.
4.18 ACCREDITATION. Lifemark Texas shall comply with the standards of
accreditation organizations in its performance of this Agreement if HMO
pursues accreditation, or is accredited, by an accreditation organization.
5 OBLIGATIONS OF LIFEMARK TEXAS
5.1 SCOPE OF HEALTH CARE SERVICES.
Lifemark Texas, through the Participating Providers, shall provide or
arrange the Covered Services to Members in accordance with the TDHS
Contract, Article VI, Scope of Services. All Covered Services provided or
arranged by Lifemark Texas shall be provided or arranged by duly licensed,
certified or otherwise authorized Participating Providers in accordance
with (i) the generally accepted medical and surgical practices and
standards prevailing in the applicable professional community at the time
of treatment, (ii) the provisions of the Utilization Management Program
and the Quality Improvement Program, and (iii) the requirements of State
and federal law.
13
5.2 PROVIDER NETWORK REQUIREMENTS.
5.2.1 Lifemark Texas shall establish, provide, and administer a Provider
network comprising a sufficient number of Participating Providers to
provide or arrange Covered Services and meet the needs of the
Members in accordance with the TDHS Contract Article VII, Provider
Network Requirements. Lifemark Texas' Participating Providers shall
provide or arrange Covered Services, including Emergency Services,
to Members twenty-four (24) hours a day, three hundred sixty-five
(365) days per year. Participating Providers must meet credentialing
standards and have entered into a Provider contract before providing
or arranging Covered Services to Members. Lifemark Texas shall
establish, provide and administer a credentialing program in
accordance with the TDHS Contract, Section 7.8, and the Delegated
Credentialing Program, attached hereto as Addendum 1. In order to
assist Lifemark Texas with the establishment of a Provider network,
HMO hereby grants Lifemark Texas full use of and access to HMO's
Provider network established for the Program. Lifemark Texas shall
pay HMO [x]* each Contract Year for such use and access.
Notwithstanding this grant of full use and access to HMO's Provider
network, HMO retains its rights to restrict, suspend or terminate
Participating Providers. Notwithstanding the grant of full use of
and access to HMO's Provider network to Lifemark Texas, HMO shall
maintain its Provider network and Provider contracts in compliance
with the TDHS Contract.
5.2.2 All Participating Providers must have a written contract with HMO,
to participate in the Program. All standard formats of Provider
contracts shall be attached as addendum to this Agreement. Any
modifications to the standard formats of Provider contracts must be
approved by HMO and TDHS. The standard Provider contracts are the
following:
_Participating Primary Care Physician Agreement - Addendum 2
_Participating Specialist Physician Agreement - Addendum 3
_Participating Medical Group Agreement - Addendum 4 _Participating
Ancillary Healthcare Provider Agreement Addendum 5 _Participating
Hospital Agreement - Addendum 6 _Participating Nursing Home
Agreement - Addendum 7
5.3 MEMBER SERVICES REQUIREMENTS.
5.3.1 Lifemark Texas shall establish, provide and administer a Member
Services program, including member education, in accordance with
Section 3.4, Sections 6.5 - 6.14, Article VIII and Article XIV of
the TDHS Contract.
5.4 MARKETING AND PROHIBITED PRACTICES.
Lifemark Texas shall comply with Article IX of the TDHS Contract in the
production and distribution of marketing materials and marketing practices
5.5 MIS REQUIREMENTS.
Lifemark Texas shall establish, provide and administer a management
information system ("MIS") in accordance with Article X of the TDHS
Contract.
5.6 QUALITY ASSURANCE AND QUALITY IMPROVEMENT PROGRAM.
Lifemark Texas shall establish, provide and administer a Quality
Assurance and Quality Improvement Program ("QIP.") in accordance with
Article XI of the TDHS Contract and the QIP. Delegation Requirements
attached hereto as Addendum 8.
14
5.7 UTILIZATION MANAGEMENT PROGRAM.
Lifemark Texas shall establish, provide and administer a Utilization
Management Program in accordance with the TDHS Contract and the
Utilization Management Delegation Requirements attached hereto as
Addendum 9.
5.8 REPORTING REQUIREMENTS. Lifemark Texas shall establish, provide and
administer a reporting system which produces the reports required in
Article XII of the TDHS Contract in the format and with the information
required by TDHS. All reports shall be simultaneously submitted to HMO and
TDHS. HMO reserves the right to require that any report be submitted to
HMO for approval prior to submission to TDHS, and the right to file
corrected reports.
5.9 MEDICAL DIRECTOR.
Lifemark Texas shall provide the equivalent of one full-time Medical
Director licensed as a physician by the Texas State Board of Medical
Examiners for the STAR and STAR+PLUS programs. Lifemark Texas shall
prepare a written job description describing the Medical Director's
authority, duties and responsibilities as described in Section 3.3 of the
TDHS Contract. Lifemark Texas agrees that the Medical Director must
exercise independent medical judgment in all medical necessity decisions.
Lifemark Texas must assure that medical necessity decisions are not
adversely influenced by fiscal management decisions. Lifemark Texas shall
permit the State to conduct reviews of medical necessity decisions by the
Medical Director at any time. If the medical director's time spent on
duties exceeds a standard full-time equivalent employee, then such excess
time shall be charged to the STAR program.
5.10 CLAIMS PROCESSING REQUIREMENTS.
5.10.1Lifemark Texas and/or its claims processing subcontractor(s) must
comply with the Texas Managed Care Claims Manual (Claims Manual),
which contains claims processing requirements. Lifemark Texas and/or
its claims processing subcontractor(s) must comply with any changes
to Claims Manual with appropriate notice of changes from the State.
5.10.2Lifemark Texas must not pay or authorize HMO to pay any claim
submitted by a Provider who has been excluded or suspended from the
Medicare or Medicaid programs for fraud and abuse when the Lifemark
Texas has knowledge of the exclusion or suspension.
15
5.10.3All Provider Clean Claims must be adjudicated (finalized as paid or
denied adjudicated) within [x]* days from the date the claim is
received by Lifemark Texas. Claims ordered to be paid by TDHS shall
be paid immediately. Lifemark Texas must pay Providers interest on a
Clean Claim which is not adjudicated within [x]* days from the date
the claim is received by the Lifemark Texas or becomes clean at a
rate of [x]* for each month the Clean Claim remains unadjudicated.
Lifemark Texas will be held to a minimum performance level of [x]*
of all Clean Claims paid or denied within [x]* days of receipt and
[x]* of all Clean Claims paid or denied within [x]* days of receipt.
Failure to meet these performance levels is a default under this
Agreement. Lifemark Texas shall pay all damages or penalties
assessed by TDHS if TDHS determines Lifemark Texas or its
subcontractor is responsible for failure to meet performance levels.
The performance levels are subject to changes if required to comply
with federal and State laws or regulations. Lifemark Texas shall not
have to spend its own funds to pay claims.
5.10.4All claims and appeals submitted to Lifemark Texas and/or its
claims processing subcontractors must be paid-adjudicated (Clean
Claims), denied-adjudicated (Clean Claims), or denied for additional
information (unclean claims) to Providers within [x]* days from the
date the claim is received by Lifemark Texas. Providers must be sent
a written notice for each claim that is denied for additional
information (unclean claims) identifying the claim, all reasons whey
the claim is being denied, the date the claim was received by
Lifemark Texas, all information required from the Provider in order
for the Lifemark Texas to adjudicate the claim, and the date by
which the requested information must be received from the Provider.
Lifemark Texas shall comply with the Member notice, appeal and fair
hearing requirements as described in the TDHS Contract, Sections
5.11 and 8.7.
5.10.5Claims that are suspended (pended internally) must be subsequently
paid-adjudicated, denied-adjudicated, or denied for additional
information (pended externally) within [x]* days from date of
receipt. No claim can be suspended for a period exceeding [x]* days
from date of receipt of the claim.
5.10.6Lifemark Texas must identify each data field of each claim form
that is required from the Provider in order for the HMO to
adjudicate the claim. Lifemark Texas must inform all network
Providers about the required fields no later than 30 days prior to
the effective date of this Agreement or as a provision within the
Provider contract. Out of network Providers must be informed of all
required fields if the claim is denied for additional information.
The required fields must include those required by the HMO and TDHS.
5.10.7Lifemark Texas is subject to the Remedies and Sanctions Article of
the TDHS Contract for claims that are not processed on a timely
basis as required by this Agreement and the Claims Manual.
Notwithstanding the provisions of Sections 5.10.3, 5.10.4, and
5.10.5, sanctions will be applied if at least [x]* of all claims are
not adjudicated (paid, denied, or external pended) [x]* days of
receipt and [x]* within [x]* days of receipt of for the Contract
Year to date. HMO shall not apply sanctions against Lifemark Texas
unless sanctions are imposed by TDHS against HMO.
16
5.10.8Lifemark Texas agrees that when it receives written notification
from TDHS or HMO that a Provider's funds be held because the
Provider has changed ownership, has an unpaid judgment, sanction,
monetary penalty or audit exception or has failed to meet some other
legal requirement, Lifemark Texas will place the Provider's funds on
hold unit it receives further notification from TDHS or HMO. Upon
notification to Lifemark Texas, Lifemark Texas must either pay the
claim or remit the held funds to TDHS.
5.10.9Lifemark Texas must comply with the standards adopted by the U.S.
Department of Health and Human Services under the Health Insurance
Portability and Accountability Act of 1996 submitting and receiving
claims information through electronic data interchange (EDI) that
allows for automated processing and adjudication of claims within
two or three years, as applicable, from the date the rules
promulgated under HIPAA are adopted.
5.11 THIRD PARTY RECOVERY. Lifemark Texas shall assist HMO in Third Party
Liability recovery efforts and pursue recovery for expenses related to
acute care services and long-term care services. Lifemark Texas shall not
exceed the limited authority granted to HMO by TDHS for Third Party
Liability recovery, and Lifemark Texas shall comply with Section 1.5 and
4.9 of the TDHS Contract in such efforts. If a subcontractor is engaged
for Third Party Liability recovery efforts, such subcontractor shall be
paid from Revenue deposited for the payment of claims.
6 INSURANCE
6.1 Lifemark Texas must maintain or cause to be maintained general liability
insurance in the amounts of at least $1,000,000 per occurrence and
$5,000,000 in the aggregate.
6.2 Lifemark Texas must maintain or require professional liability insurance
on each of the Providers in the network in the amount of $100,000 per
occurrence and $300,000 in the aggregate, or the limits required by the
hospital at which the network Provider has admitting privileges.
6.3 Lifemark Texas must maintain an umbrella professional liability insurance
policy for the greater of $3,000,000 or an amount (rounded to the next
$100,000) which represents the number of STAR+PLUS Members enrolled in HMO
in the first month of the Contract Year multiplied by $150, not to exceed
$10,000,000.
6.4 If the professional liability policy (or policies) is canceled or not
renewed and coverage is provided on a claims-made basis, Lifemark Texas
agrees to exercise any option contained in the policy (or policies) to
extend the reporting period to the maximum period permitted under the
policy (or policies); provided, however, Lifemark Texas need not exercise
such option if the superseding insurer will accept all prior claims.
17
6.5 All insurance required under this Agreement shall be provided by insurer
who meet HMO and TDHS standards. A copy of certificate of insurance shall
be issued to HMO prior to the effective date of this Agreement and upon
the renewal of the insurance coverage specified in this Article 6. The
certificate shall provide that HMO shall receive thirty (30) days prior
written notice of cancellation or material reduction in coverage. Failure
to provide the certificate of insurance shall be grounds for immediate
termination of this Agreement.
7 INDEMNIFICATION.
Lifemark Texas shall indemnify, defend and hold harmless, and shall cause
each of the Participating Providers to indemnify, defend and hold
harmless, HMO and its directors, officers, employees, affiliates and
agents against any claim, loss, damage, cost expense, money damages or
civil monetary penalties imposed by TDHS or other government agency,
forfeiture of HMO's performance bond, or liability, including reasonable
attorneys' fees and expenses (except for jointly shared legal fees and
expenses for investigations under Section 4.8 below) arising out of or
related to the performance or nonperformance by Lifemark Texas,
Participating Providers, their employees and agents, of any services to be
performed or arranged under this Agreement, or arising out of or related
to the grant of full use of and access to Lifemark Texas of HMO's Provider
network.
8 GOVERNING LAW AND REGULATORY REQUIREMENTS.
8.1 GOVERNING LAW. This Agreement and the rights and obligations of the
parties hereunder shall be construed, interpreted, and enforced in
accordance with, and governed by, the laws of the State of Texas and the
United States of America, including, without limitation, the Texas Human
Resources Code, Chapter 32 and the Texas Health Maintenance Organization
Act, as amended, and the regulations adopted thereunder by the Texas
Department of Insurance (the "Texas HMO Act"). Any provisions required to
be in this Agreement by the Texas HMO Act or any other State and federal
law or by the Texas Department of Insurance ("TDI") or any other State
agencies shall bind HMO and Lifemark Texas whether or not expressly
provided in this Agreement.
8.2 NON-BILLING OF MEMBER (MEMBER HOLD HARMLESS PROVISION - HMO INSOLVENCY AND
HMO NON-PAYMENT). With the exception of copayments and charges for
non-Covered Services delivered on a fee-for-service basis to Members,
Lifemark Texas and its Participating Providers shall in no event,
including, without limitation, non-payment by HMO, insolvency of HMO or
Lifemark Texas, or breach of this Agreement, bill, charge, collect a
deposit from, or attempt to bill, charge, collect or receive any form of
payment, compensation or reimbursement from, or have any recourse against,
any Member or any person (other than HMO) acting on behalf of any Member
for Covered Services provided pursuant to this Agreement.
18
Lifemark Texas shall not maintain any action at law or equity against a
Member to collect sums owed by HMO to Lifemark Texas. Upon notice of any
such action, HMO may terminate this Agreement as provided above and take
all other appropriate action consistent with the terms of this Agreement
to eliminate such charges.
Lifemark Texas's obligations under this Section shall survive the
termination of this Agreement with respect to Covered Services provided
during or after the term of this Agreement, regardless of the cause giving
rise to such termination and shall be construed to be for the benefit of
the Member. This Section supersedes any oral or written contrary agreement
now existing or hereafter entered into between Lifemark Texas or any of
its Participating Providers or Members or persons acting on Member's
behalf. All Provider contracts shall contain a provision similar to this
Section in which the Provider shall hold harmless the Member for HMO or
Lifemark Texas's insolvency or nonpayment.
Any modification, addition or deletion to the provisions of this Section
shall become effective on a date earlier than fifteen (15) days after the
Commissioner of the Texas Department of Insurance has received written
notice of such proposed changes.
8.3 PROVISIONS REQUIRED BY "PATIENT PROTECTION RULES". The provisions set
forth below are required to be included in this Agreement pursuant to the
"Patient Protection Rules" adopted by the Texas Department of Insurance,
as set forth in Chapter 11 of Title 28 of the Texas Administrative Code.
Lifemark Texas shall include the provisions set forth in this Section in
all subcontracts with its Participating Physicians and Participating
Providers.
8.3.1 PRE-TERMINATION NOTICE. Before terminating Lifemark Texas or any of
the Participating Providers, HMO shall provide a written explanation
to Lifemark Texas or the Participating Provider of the reason(s) for
termination. Before terminating any of its Participating Providers,
Lifemark Texas shall provide a written explanation to the
Participating Provider of the reason(s) for termination.
19
8.3.2 PRE-TERMINATION REVIEW FOR PHYSICIAN. Within sixty (60) days of
receipt of written notice of termination from HMO or Lifemark Texas,
any of Participating Providers may submit a request in writing to
HMO or Lifemark Texas for a review of the proposed termination. Any
review requested hereunder will be conducted by an advisory panel
consisting of Providers including at least one representative in the
Provider's same or similar specialty, if available, appointed to
serve on the standing quality improvement committee or utilization
management committee. The recommendation of the advisory review
panel shall be considered by HMO or Lifemark Texas but shall not be
binding on HMO or Lifemark Texas. A copy of the recommendation of
the advisory review panel and HMO's or Lifemark Texas's
determination following review shall be provided to the affected
Provider upon request. Not withstanding the foregoing, a Provider
shall not be entitled to a review in any case in which there is
imminent harm to patient health or an action by a State medical, or
other physician licensing board or other governmental agency that
effectively impairs the Provider's ability to practice medicine or
another profession or in cases of fraud or malfeasance.
8.3.3 NOTICES TO MEMBERS OF TERMINATION OF AGREEMENT. HMO shall provide at
least thirty (30) days prior written notice to Members of the
impending termination of this Agreement or the impending termination
of any of Participating Providers who is providing ongoing treatment
to such Members on the effective date of termination, so that such
Members may select another Participating Provider or request
continued ongoing treatment through Lifemark Texas or the
Participating Provider following termination as provided in Section
8.3.5 below.
8.3.4 PROHIBITION AGAINST RETALIATION. Lifemark Texas and its
Participating Providers shall not be terminated or non-renewed by
HMO in retaliation against Lifemark Texas or any Participating
Provider for reasonably filing a complaint against HMO or appealing
a decision of HMO on behalf of a Member.
8.3.5 CONTINUING CARE FOR MEMBERS OF SPECIAL CIRCUMSTANCE. Following the
termination of this Agreement or of any of Participating Providers
for any reason other than medical competence or professional
behavior, Lifemark Texas or such Participating Provider shall
continue to provide treatment to any Member of special circumstance,
such as a Member who has a disability, acute condition,
life-threatening illness or is past the twenty-four (24th) week of
pregnancy, who is receiving ongoing Covered Services from Lifemark
Texas or its Participating Provider on the effective date of
termination, and HMO shall reimburse Lifemark Texas or its
Participating Provider for the Member's continuing ongoing treatment
at the rates set forth in this Agreement, in accordance with the
dictates of medical prudence and the provisions of this Section.
For purposes of this Section, "special circumstance" shall mean a
condition such that Lifemark Texas or its Participating Provider
reasonably believes that discontinuing care by Lifemark Texas'
Participating Provider could cause harm to the Member. Lifemark
Texas or its Participating Provider shall identify a Member of
special circumstance to HMO and request that such Member be
permitted to continue treatment under Lifemark Texas or its
Participating Provider's care, and Lifemark Texas or its
Participating Provider shall not seek payment from such Member of
any amounts for which the Member is not responsible under the
Program. The obligations of Lifemark Texas and its Participating
Providers and HMO under this Section shall extend for at least
ninety (90) days from the effective date of termination of this
Agreement or beyond nine months in the case of a Member who at the
time of termination has been diagnosed with a terminal illness. Any
dispute arising between HMO and Lifemark Texas or any of its
Participating Providers regarding the necessity for continued
treatment by Lifemark Texas Participating Provider shall be resolved
pursuant to the dispute resolution procedure as provided herein.
20
8.3.6 NO INDEMNIFICATION. This Agreement may not contain any provision
purporting to indemnify the HMO for any tort liability resulting
from acts or omissions of the HMO.
8.3.7 EXPEDITED REVIEW. A physician or provider who is terminated or
deselected shall be entitled to an expedited review process by HMO
or Lifemark Texas on request by the physician or provider. If the
physician or provider is deselected for reasons other than at the
physician's or provider's request, HMO or Lifemark Texas may not
notify patients of the physician's or provider's deselection until
the effective date of the termination or the time a review panel
makes a formal recommendation. If a physician or provider is
deselected for reasons related to imminent harm, HMO or Lifemark
Texas may notify patients immediately.
8.3.8 POSTED NOTICE OF COMPLAINT PROCESS. HMO, Lifemark Texas and each
Participating Provider shall post in its facility of facilities a
notice to Members of the process for resolving complaints with the
HMO. The notice must include TDI's toll-free telephone number for
filing complaints.
8.4 REQUIREMENTS FOR CONTRACT BETWEEN PRIMARY HMO AND LIFEMARK TEXAS. The
provisions set forth below are required to be included in this Agreement,
as an agreement between the parties, pursuant to Section 11.1604 of Title
28 of the Texas Administrative Code ("Section 11.1604"). For purposes of
this Agreement, "Primary HMO" is HMO, as defined in Section 11.2(b)(20) of
Title 28 of the Texas Administrative Code. For purposes of this Agreement,
Lifemark Texas is acting as an "Approved Non Profit Health Corporation"
providing "health care services" within the meaning of Section 11.1604 for
purposes of determining Primary HMO regulatory contractual requirements.
8.4.1 LIFEMARK TEXAS'S ACKNOWLEDGMENTS AND AGREEMENTS. Lifemark Texas
acknowledges and agrees that:
(i) HMO, acting in the role of the Primary HMO under this
Agreement, is required under the Texas HMO Act and
regulations of the Texas Department of Insurance ("TDI")
and the Texas Department of Health ("TDH") to establish,
operate and maintain a health care delivery system, quality
assurance system, provider credentialing system and other
systems and programs meeting TDI and Texas Health Care
Council standards and is directly accountable for
compliance with such standards.
21
(ii) The role of Lifemark Texas, acting as an "Approved Non Profit
Health Corporation" within the meaning of Section 11.1604, is
limited to implementing certain systems of utilizing standards
approved by HMO and subject to HMO's oversight and monitoring
of Lifemark Texas's performance.
(iii) HMO may take whatever action deemed necessary by HMO, to
assure that all HMO system and program functions which are
delegated or assigned to Lifemark Texas under this Agreement
are performed in full compliance with all applicable
regulatory requirements of TDI.
8.5 HMO'S RESPONSIBILITY AS PRIMARY HMO. Nothing contained in this Agreement
shall be construed to in any way limit HMO's authority and responsibility
for compliance with the provisions of the Texas HMO Act and all regulatory
requirements of TDI. HMO shall submit a monitoring plan to TDI setting
out:
a) how HMO will ensure Lifemark Texas has an effective administrative
system for providing timely and accurate reimbursement to all physicians
and providers under contract with Lifemark Texas or HMO; and
b) how HMO will ensure that all HMO functions which are delegated or
assigned under contract with Lifemark Texas are consistent with full
compliance by HMO with all regulatory requirements of TDI.
8.6 PROVIDER CONTRACTS. Lifemark Texas shall make available to HMO all
contracts with Participating Providers so as to ensure compliance with the
following:
(a) a Provider contract cannot be terminated by Lifemark Texas without
ninety (90) days written notice;
(b) a hold harmless provision is included providing that Lifemark Texas
and its contracted physicians and Providers are prohibited from billing or
attempting to collect from HMO Members (except for authorized co-payments
and deductibles) for Covered Services under any circumstance, including
the insolvency of HMO or the Lifemark Texas; and
c) the Provider contract contains a provision that nothing in this
Agreement shall be construed in any way to limit the HMO's authority or
responsibility to comply with all TDI regulatory requirements.
8.7 FINANCIAL SOLVENCY. Lifemark Texas shall provide HMO with evidence of
Lifemark Texas's financial solvency and financial ability to perform, such
as a certified financial audit of the Lifemark Texas by independent
certified public accountants, utilizing generally accepted accounting and
auditing principles.
22
8.8 PROVISION OF DATA. Lifemark Texas shall provide to HMO on at least a
monthly basis, in a usable form necessary for audit purposes, the data
necessary for HMO to comply with the TDI and Texas Health Care Council
reporting requirements with respect to any Covered Services provided
pursuant to this Agreement, including, without limitation, the following
data:
(i) number of Members served or assigned to Lifemark Texas (including
number added and terminated since the last reporting period);
(ii) form of contracts with the Participating Providers who will be
providing Covered Services to the Members and any material changes
to such contracts;
(iii) Copayments received by Lifemark Texas;
(iv) summary of amounts paid by Lifemark Texas to physicians and
providers;
(v) description of Lifemark Texas's payment methods for Participating
Providers (i.e., capitation, fee-for-service or other risk sharing);
(vi) utilization data;
(vii) summary of the amounts paid by Lifemark Texas for administrative
services relating to HMO;
(viii)time period that claims and debts related to claims owed by the
Lifemark Texas have been pending;
(ix) information required by HMO to file its own claims for reinsurance,
coordination of benefits and subrogation;
(x) Member satisfaction data;
(xi) Member complaint data;
(xii) documentation of any regulatory inquiries or investigations
regarding Lifemark Texas or any Participating Provider; and
(xiii)any other data necessary to assure proper monitoring and control of
delivery network, by HMO.
8.9 ON-SITE AUDIT. HMO shall conduct an on-site audit of Lifemark Texas no
less frequently than annually or more frequently upon indication of any
material non-compliance, to obtain information necessary to verify
Lifemark Texas's compliance with all regulatory requirements of TDI. HMO
shall make written documentation of such audits available to the TDI upon
request.
23
8.10 CORRECTIVE ACTION. HMO shall take prompt action to correct any failure by
Lifemark Texas to comply with regulatory requirements of the TDI relating
to any systems or functions delegated by HMO to Lifemark Texas under this
Agreement and necessary to ensure HMO's full compliance with all
applicable regulatory requirements.
9 REVENUE, ACCOUNTS, ADMINISTRATIVE FEES AND RISK SHARING.
9.1 OPERATIONAL PHASE. Lifemark Texas shall be paid an Administrative Fee as
set forth in Exhibit A of this Agreement.
Lifemark Texas will estimate and be paid the monthly Administrative Fee
before the fifteenth day of the month. Any adjustments based on the actual
membership figures will be made to the subsequent months payment. Lifemark
Texas will produce a monthly Administrative Services Fee Reconciliation
Report setting forth estimated payment of that month and reconciliation
for prior periods. In no event shall the total Administrative Fee paid to
Lifemark Texas in any Contract [x]* of that Contract Year's Revenue (as
defined below).
In return for receiving the Administrative Fee, Lifemark Texas shall be
responsible for all costs associated with the administration of the
Program, except for the following expenses, which shall be the
responsibility of the HMO:
9.1.1 claims costs for Covered Services;
9.1.2 legal services of the HMO;
9.1.3 actuarial services of the HMO;
9.1.4 all insurance premiums for the HMO;
9.1.5 directors' fees and expenses related to HMO Board of
Director meetings;
9.1.6 expenses relating to the corporate existence of the HMO;
9.1.7 audit and tax services of the HMO;
9.1.8 advertising and marketing expenses of the HMO;
9.1.9 any income, property, premium or other taxes of the HMO and
any assessments or license fees;
9.1.10other expenses clearly related to the business of the
HMO as an independent corporate entity;
24
9.1.11costs associated, including preparation of proposals, for the
expansion of the HMO into additional service areas.
9.2 REVENUE AND ACCOUNTS.
9.2.1 PROGRAM CONTRACT YEAR 2000. For the partial Program Contract Year
beginning December 1, 1999 and ending August 31, 2000, HMO shall
deposit [x]* of Revenue into the HMO's Contract Depository Account
("CDA") and the remaining [x]* of Revenue into an account designated
by HMO to pay for HMO's oversight, reinsurance and recovery of
initial Program start-up costs. "Revenue" means the monthly payments
and all subsequent adjustment payments, made to the HMO under the
TDHS Contract.
9.2.2 PROGRAM CONTRACT YEAR 2001. For the Program Contract Year beginning
September 1, 2000 and ending August 31, 2001, HMO shall deposit [x]*
of Revenue into the CDA, and the remaining [x]* of Revenue into an
account designated by HMO to pay for HMO's oversight, reinsurance
and recovery of initial Program start-up costs.
9.2.3 PROGRAM CONTRACT YEAR 2002. If this Agreement is extended for
Program Contract Year beginning September 1, 2001 and ending August
31, 2002, HMO shall deposit [x]* of Revenue into the CDA and the
remaining [x]* of Revenue into an account designated by HMO to pay
for HMO's oversight, reinsurance and recovery of
initial Program start-up costs.
9.2.4 PROGRAM CONTRACT YEAR 2003. If this Agreement is extended for the
Program Contract Year beginning September 1, 2002 and ending August
31, 2003, the parties shall agree as part of such extension as to
the division of the Revenue.
9.3 RISK SHARING.
9.3.1 SHARING OF NET INCOME BEFORE TAXES. Commencing on the effective date
of this Agreement, and for each Contract Year thereafter, HMO and
Lifemark Texas shall share equally in the "HMO Share" of the excess
of allowable HMO STAR+PLUS revenues over allowable HMO STAR+PLUS
expenses as measured by any positive amount for Net Income Before
Taxes of the final Managed Care Financial Statistical Report
("Report"). The amount for Net Income Before Taxes of the Report
shall include, or be combined with, any interest earned or
investment income on Revenue. No amount shall be paid to Lifemark
Texas until TDHS has been paid its experience rebate, if any, under
the TDHS Contract. Lifemark Texas's participation in the "HMO Share"
is contingent upon Lifemark Corporation's repayment in full of any
outstanding notes or loans from HMO. If Net Income Before Taxes of
the Report for any Contract Year is a negative number, HMO and
Lifemark Texas shall each contribute an equal amount to HMO's CDA
sufficient to eliminate the deficit within fifteen (15) days of the
filing of the Report with TDHS. Lifemark Texas and HMO shall be
paid within fifteen (15) days after filing of the Report their equal
shares, if any, of a positive "HMO Share". Claims incurred during
a Contract Year but paid after the determination of "HMO Share"
shall be considered in the risk sharing settlement for the following
Contract Year.
25
9.3.2 ADJUSTMENT. HMO and Lifemark Texas acknowledge that TDHS may make
adjustments to Net Income Before Taxes after payment of the amounts
in Section 9.3.1. HMO and Lifemark Texas shall repay amounts to the
CDA which may be due to such adjustment within fifteen (15) days of
the determination of the adjustment.
9.3.3 SECURITY FOR DEFICITS. As security for Lifemark Texas's payment of
any deficits is described in Section 9.3.1 above, Lifemark Texas
shall purchase a Certificate of Deposit instrument ("Collateral") in
an amount determined annually by the parties. Such Collateral shall
be assigned to HMO and pledged in writing for the HMO's benefit.
Such pledge shall be in the form of the agreement attached hereto as
Addendum 10. The Collateral amount shall be agreed upon by both
parties annually within ninety (90) days after commencement of a
Contract Year. If the parties cannot agree, then an independent
actuarial firm shall be selected by mutual agreement to determine
the Collateral amount. The parties shall share equally the cost of
the actuarial firm. The actuarial firm's recommendation for the
Collateral amount shall be binding upon the parties. The Collateral
amount for Contract year 2000 is [x]*. The Collateral amount shall
not be changed until any deficits for the previous Contract Year
have been paid by Lifemark Texas. The Collateral shall be
established within thirty (30) days of the execution of this
Agreement. If the Collateral is not established by such date,
Lifemark Texas shall forfeit the Additional Administrative Fee
provided in EXHIBIT A until the Collateral is established. This
provision shall survive the termination of this Agreement.
9.3.4 SECURITY EXCEPTION. If Lifemark Texas obtains a Texas health
maintenance organization license, or if Lifemark Corporation or one
of its affiliates obtains a Texas health maintenance organization
license and this Agreement is assigned to such entity, the parties
shall determine, in consultation with TDI, if the Collateral may be
used to jointly satisfy the requirements of Section 9.3.3 and TDI's
minimum net worth requirements for health maintenance organizations.
If TDI rejects such proposal, such entity shall maintain the
Collateral solely for the purposes of this Agreement. If TDI accepts
such proposal, TDI must agree that HMO will have a first priority
lien on the Collateral.
26
10 TERM AND TERMINATION.
10.1 TERM. This Agreement shall be effective on December 1, 1999, (though
it may be finally executed and delivered on a subsequent date) or
the first day of the month following TDHS approval of this Agreement
if TDHS must approve the effective date, through August 31, 2001.
The parties may extend the Agreement by mutual written agreement for
additional one (1) year periods, not to exceed two (2) extensions.
Each such extension shall be effective on September 1, or the
effective date of the Contract Year between TDHS and the HMO. If a
party does not desire to extend this Agreement, such party must
provide the other party at least one hundred twenty (120) days
written notice prior to the expiration of the current term. Such
extensions of this Agreement shall be of no force and effect if TDHS
and HMO do not agree to a Program contract for the extension periods
of this Agreement.
10.2 TERMINATION. This Agreement may be terminated upon the following:
10.2.1 at any time upon the written mutual consent of both parties.
10.2.2either party may terminate this Agreement for a material
breach or upon the failure of either party to obtain and
maintain any license, registration or approval required under
State or federal law that is material to the operation of the
Plan Program which has not been cured within 30 days after the
"Cure Period". The Cure Period is defined as sixty (60) days
from the date on which one party receives notice of a material
breach from the other party. Provided however, if the material
breach involves failure to pay Administration Fees when due,
the Cure Period shall be (10) days. If this Agreement is
assigned to Lifemark Corporation or an affiliate during a Cure
Period, such assignee shall be subject to the breach notice
and the remaining portion of the Cure Period.
10.2.3In the event the contract between TDHS and the HMO is
terminated for any reason or the HMO's participation in the
Program is otherwise terminated, in which case termination
shall be effective as of the termination date of the HMO's
participation in the Program.
10.2.4Immediately upon the filing of a bankruptcy petition by either
party.
27
10.3 OBLIGATIONS IN EVENT OF TERMINATION.
10.3.1Upon termination of this Agreement for reasons other than those
described in Section 10.2.2 of this Agreement, HMO shall purchase
those fixed assets and leasehold improvements acquired and used by
Lifemark Texas (or its subcontractor Lifemark Corporation) to
administer the HMO at a price equal to the book value of such assets
as determined by Lifemark Texas (or its subcontractor Lifemark
Corporation) at the termination date. Lifemark Texas (or its
subcontractor Lifemark Corporation) shall use Generally Accepted
Accounting Principles (GAAP) for depreciation of fixed assets and
leasehold improvements. HMO shall also agree to assume and/or be
fully financially responsible for any lease of office space or
equipment being utilized for HMO operations and to indemnify
Lifemark Texas (or its subcontractor Lifemark Corporation) against
any liability therefor. The purpose of this reimbursement is to
allow the recovery of those costs normally covered over the life of
a contract.
10.3.2In the event of termination of this Agreement for any reason,
Lifemark Texas and its subcontractors shall fully cooperate with the
person or entity selected by HMO to assume administration of the
Program.
10.3.3In the event of termination of this Agreement, Lifemark Texas shall
provide HMO with all copies of records in Lifemark Texas's or its
subcontractor's Program and which are necessary for the continued
operation of the Program, or shall forward such records to a
successor administrator as directed by HMO.
10.3.4Upon termination of this Agreement for any reason, Lifemark Texas,
at HMO's option, shall continue to adjudicate all incurred claims
that had not been paid as of the termination date. HMO shall pay
Lifemark Texas a fee of [x]* of the paid claim amount for each claim
adjudicated. Lifemark Texas shall have no obligation to expend its
own funds to adjudicate such claims, but shall deliver such claims
to the HMO pursuant to the HMO's instructions. Lifemark Texas shall
have no obligation to adjudicate claims incurred after the
termination date of this Agreement.
10.3.5NOTICE OF WITHDRAWAL. If HMO determines to withdraw from or limits
involvement in the Program, HMO shall give Lifemark Texas ninety
(90) days prior written notice. To "withdraw" shall mean an action
by HMO to terminate the TDHS Contract, or HMO's failure or decision
not to extend or renew the TDHS Contract. To "limit involvement"
shall mean an action by HMO not to expand its service area in the
Program if the HMO is presented such an opportunity. HMO agrees that
if HMO withdraws or limits its involvement in the Program, Lifemark
Texas may pursue such opportunity independently of HMO.
11 MISCELLANEOUS.
11.1 CONFIDENTIALITY. Lifemark Texas agrees to safeguard the confidentiality of
all data pertaining to this Agreement and Covered Services rendered to
Members in accordance with TDHS requirements.
28
11.2 RELATIONSHIP OF THE PARTIES. In the performance of the work, duties and
obligations of the parties pursuant to this Agreement, the parties shall,
at all times, be acting and performing as independent contractors. No
relationship of employer and employee, or partners or joint venturers
created by this Agreement, and neither party may therefore, make any claim
against the other party for social security benefits, workers'
compensation benefits, unemployment insurance benefits, vacation pay, sick
leave or any other employee benefit of any kind. In addition, neither
party shall have any power or authority to act for or on behalf of, or to
bind the other except as herein expressly granted, and no other or greater
power or authority shall be implied by the grant or denial of power of
authority specifically mentioned herein.
11.3 ASSIGNMENT/SUBCONTRACTING. Neither party shall have the right to assign,
delegate or subcontract any of its rights or obligations hereunder without
the prior written consent of the other party. The parties agree that this
Agreement shall be assigned by HMO to Lifemark Corporation or to an
affiliate of Lifemark Corporation if Lifemark Corporation or the affiliate
obtains a Texas health maintenance organization license. HMO hereby
consents to the assignment of the Amended and Restated Administrative
Services Agreement attached hereto as Addendum 11 whereby Lifemark
Corporation shall perform certain administrative services for and on
behalf of Lifemark Texas.
11.4 NOTICES. Except as set forth herein, all notices require or permitted to
be given hereunder, shall be in writing and shall be sent by United States
mail, certified or registered, return receipt requested, postage prepaid,
to the parties hereto at their respective addresses set forth on the
signature page hereto, or such other address as may be fixed in accordance
with the provisions hereof. Except as set forth herein, if mailed in
accordance with the provisions of this paragraph, such notice shall be
deemed to be received three (3) business days after mailing.
11.5 HEADINGS. The headings of the various sections of this Agreement are
inserted merely for the purpose of convenience and do not expressly or by
implication limit, define or extend the specific terms of the section so
designated.
11.6 WAIVER OF BREACH. The waiver by either party of a breach or violation of
any provision of this Agreement shall not operate as, nor be construed to
be, a waiver of any subsequent breach thereof.
11.7 APPLICABLE LAW. This Agreement shall be governed in all respects by
the laws of the State of Texas.
29
11.8 INVALID PROVISIONS. If, for any reason, any provision of this Agreement is
or shall be hereafter determined by law, act, decision, or regulation of a
duly constituted body or authority, to be in any respect invalid, such
determination shall not nullify any of the other terms and provisions of
this Agreement and, unless otherwise agreed to in writing by the parties,
then, in order to prevent the invalidity of such provision or provisions
of this Agreement, the said provision or provisions shall be deemed
automatically amended in such respect as may be necessary to conform this
entire Agreement with such applicable law, act, decision, rule or
regulation.
11.9 NO THIRD-PARTY BENEFICIARY. This Agreement is entered into by and between
HMO and Lifemark Texas and for their benefit. There is no intent by either
party to create or establish third-party beneficiary status or rights or
their equivalent in any Member, subcontractor, or other third party, and
no such third party shall have any right to enforce any right or enjoy any
benefit created or established under this Agreement.
11.10 COMPLAINT AND APPEAL PROCESS. In the event that any dispute relating to
this Agreement arises between Lifemark Texas and HMO, the parties will
make a good faith effort to resolve the dispute informally. If the dispute
cannot be resolved informally, Lifemark Texas must submit a written
complaint to which clearly states the basis of the complaint and a
proposed resolution. HMO shall respond to a written complaint to HMO
within thirty (30) days of receipt, either accepting, rejecting, or
modifying Lifemark Texas's proposed resolution. This will be HMO's final
determination. If the parties are unable to resolve the dispute through
the complaint process, the dispute shall be resolved by binding
arbitration in accordance with the Rules of Commercial Arbitration of the
American Arbitration Association. In no event may the arbitration be
initiated more than one year after the date one party first gave written
notice of the dispute to the other party. The arbitration shall be held in
Dallas, Texas or in such other location as the parties may mutually agree
upon. The arbitrator shall have no power to award punitive or exemplary
damages or vary the terms of this Agreement and shall be bound by
controlling law.
11.11 REVIEW AND AUDIT. Upon reasonable notice, or such notice as is permitted
by federal or State authorities, Lifemark Texas will at all times make
available for review and audit by either the HMO or its designee its
files, books, procedures and records (including computer terminal access
to same) pertaining to the Program or the services provided by Lifemark
Texas or Lifemark Corporation under this Agreement. In addition, Lifemark
Texas shall make available for interview with HMO's auditor those
personnel with material involvement or responsibility with respect to the
services provided by Lifemark Texas or Lifemark Corporation under this
Agreement.
11.12 ENTIRE AGREEMENT: AMENDMENT. This Agreement and all exhibits and addendums
hereto shall constitute the entire agreement relating to the subject
matter hereof between the parties hereto, and supersedes all other
agreements, written or oral, relating to the subject matter hereof. This
Agreement may be amended by mutual agreement of the parties, provided that
such amendment is reduced to writing and signed by both parties.
11.13 EXHIBITS. Any exhibits or addendums attached to this Agreement are an
integral part of this Agreement and are incorporated herein by reference.
30
11.14 STATE GOVERNMENT APPROVALS. The parties acknowledge and agree that this
Agreement is subject to review and approval by TDI and TDHS.
12 RIGHT OF FIRST REFUSAL. HMO hereby grants a right of first refusal to
Lifemark Texas, Lifemark Corporation, or a Lifemark Corporation affiliate
to be the administrative services manager and health services Provider if
HMO expands its service area in the Program. Further, HMO hereby grants a
right of first refusal to Lifemark Texas, Lifemark Corporation, or a
Lifemark Corporation affiliate, to enter into an arrangement of equal
sharing of medical risk in the Program, or any other form of relationship
in which such risk is shared equally by the parties. The parties agree to
negotiate with each other in good faith as to the allocation of start-up
expenses and administrative services fees related to the expansion. If HMO
declines to pursue the expansion, Lifemark Texas, Lifemark Corporation, or
a Lifemark Corporation affiliate may pursue the opportunity independently
of HMO.
13 NON-COMPETE. During the term of this Agreement, Lifemark Texas, Lifemark
Corporation, or a Lifemark Corporation affiliate may not compete with HMO
in the Program, or enter into a contract with an entity that competes with
HMO in the Program without obtaining HMO's prior written consent;
provided, however, this restrictive covenant does not apply to service
area expansion in the Program which HMO has declined or failed to pursue.
Except as set forth above, HMO and Lifemark Texas, Lifemark Corporation,
or a Lifemark Corporation affiliate may pursue independently of each other
business opportunities which are unrelated to the Program.
IN WITNESS WHEREOF, the parties have executed this Agreement to be
effective as of the day and year first set forth above.
RIO GRANDE HMO, INC.
By: /S/DAVID G. BICK Its VICE PRESIDENT
--------------------- --------------
Date: JANUARY 19, 2000
ADDRESS FOR NOTICES:
901 S. Central Expressway
Richardson, Texas 75080
LIFEMARK OF TEXAS, INC.
By: /S/MICHAEL J. KENNEDY Its VICE PRESIDENT
--------------------- --------------
Date: JANUARY 19, 2000
ADDRESS FOR NOTICES:
7600 North 16th Street, Suite 150
Phoenix, Arizona 85020
31
EXHIBIT A
ADMINISTRATIVE FEE SCHEDULE
RIO GRANDE HMO - HARRIS COUNTY, TEXAS
EFFECTIVE DECEMBER 1, 1999
ABD / SSI MANAGEMENT FEE SCHEDULE FOR MEMBERS DETERMINED BY TDHS AS "OTHER
COMMUNITY CLIENTS (DUAL ELIGIBLE AND MEDICAID ONLY, COMBINED)"
Tier Membership Fees
The Greater of:
I. First [x]* [x]* PMPM or [x]*
II. Next [x]* [x]* PMPM or [x]*
[x]*
III. Members in Excess of [x]* PMPM or [x]*
If membership for ABD lives falls below [x]* members, Plan will reimburse
Lifemark Texas at its actual costs (as determined by a Plan-approved budget)
plus [x]* per month. This maximum reimbursement amount applies to ABC/SSI and
LTC, combined, if both groups are under the minimum memberships for the month.
Costs will be determined by allocating total costs based on membership. For
allocation purposes, [x]* member will equal [x]* members.
LTC MANAGEMENT FEE SCHEDULE FOR ALL OTHER MEMBER RISK GROUPS COMBINED
Tier Membership Fees
The Greater of:
I. First [x]* [x]* PMPM or [x]*
II. Next [x]* [x]* PMPM or [x]*
III. Members in Excess of [x]* [x]* PMPM or [x]*
If membership for LTC lives falls [x]* members, Plan will reimburse Lifemark
Texas at its actual costs (as determined by a Plan-approved budget) plus [x]*.
This maximum reimbursement amount applies to ABC/SSI and LTC, combined, if both
groups are under the minimum memberships for the month. Costs will be determined
by allocating total costs based on membership. For allocation purposes, [x]*
member will equal [x]* members.
Lifemark Texas shall be paid the following Administrative Fees in addition to
the Base Fees above:
CONTRACT YEAR ADDITIONAL ADMINISTRATIVE FEE
(% of Revenue)
12/01/99 - 08/31/00 [x]*
09/01/00 - 08/31/01 [x]*
09/01/01 - 08/31/02 (if extended) [x]*
09/01/02 - 08/31/03 (if extended) (Subject to negotiation)
* CONFIDENTIAL TREATMENT REQUESTED
32