MANAGEMENT SERVICES AGREEMENT
This Management Services Agreement ("Management Agreement") is entered into
effective January 1, 1996 by and between Talbert Medical Management Corporation,
a Delaware corporation ("Manager") and Talbert Medical Group, Inc., a ________.
professional medical corporation ("Group").
R E C I T A L S
A. Manager is a Delaware corporation which is operated, in part, for the
purposes of providing management services related to the operation of medical
groups such as Group.
B. Group is a __________ professional medical corporation which is duly
licensed and qualified through service agreements with its independent
contractors and employees ("Group Physicians"), to provide physician services to
its patients ("Patients"). The Patients include individuals to whom services
are provided under the terms of contracts with payors for health care services
("Group Agreements").
C. In connection with Group's providing physician services under
agreements with payors, negotiated by Manager, and for other valuable
consideration, Manager has agreed to provide the management services provided
for herein.
D. This Management Agreement is made in order to provide the terms upon
which Manager will provide management services to Group.
ARTICLE I
RESPONSIBILITIES OF MANAGER
Except as otherwise specifically provided herein, during the term of this
Management Agreement and any extensions and renewals hereof, Manager shall, at
its sole cost and expense, provide all management services including providing
facilities, support, non-physician personnel, billing, equipment, furnishings,
and supplies required for the operation of Group as an integral part thereof at
the premises established for such purposes. Such performance by Manager shall
be carried out in accordance with the following standards and procedures:
1.1 PRACTICE SITES. Manager shall provide certain premises set forth on
EXHIBIT 1.1 hereto, together with all appurtenances, improvements, and fixtures,
(hereinafter collectively referred to as the "Practice Sites") at which Group
will render professional medical services. Changes in the location of a
Practice Site may be effected as of the
expiration of any lease or other arrangement under which Manager leases or
occupies any Practice Site or at any other time as may be approved by Manager.
Any additional Practice Sites will be established as may be approved by the
Joint Operating Committee.
1.2 UTILITIES, BUILDING SERVICES, AND SUPPLIES. Manager shall provide or
arrange for all utilities and building services related to the utilization by
Group of Practice Sites. Manager shall also provide telephones, reception,
secretarial and transcribing services, paging devices, postage, duplication
services, office supplies and medical supplies which Manager determines to be
necessary or appropriate for the operation of the Practice Sites.
1.3 EQUIPMENT, FURNITURE AND FURNISHINGS. Manager shall provide or
arrange for all the equipment (including computer equipment and software),
furniture, furnishings and personal property which Manager determines to be
necessary for the operation of Group ("Equipment").
1.4 REPAIR AND MAINTENANCE OF PRACTICE SITES AND EQUIPMENT. Manager shall
have the responsibility for:
1.4.1 REPAIR AND MAINTENANCE OF PRACTICE SITES. All of the lessee
maintenance and repair obligations for the Practice Sites required to be
provided pursuant to the terms of any Practice Site lease or similar agreement,
and any and all other maintenance and repairs to Practice Sites which Manager
determines to be necessary or appropriate for the efficient and proper operation
of Group.
1.4.2 REPAIR AND MAINTENANCE OF EQUIPMENT. The maintenance and
repair of all Equipment as determined by Manager to be necessary or appropriate
for the efficient and proper operation of Group.
1.5 REPLACEMENT EQUIPMENT. Should Manager determine that any then
existing Equipment utilized in the operations of Group is worn out or obsolete
and it is unreasonable, impossible, or economically impractical to repair; and
if Manager further determines that such Equipment is necessary or appropriate
for the efficient and proper operation of Group; then Manager shall procure
replacement Equipment.
1.6 SIGNS. Manager shall provide signage, including but not limited to
signage containing such name(s) as may be determined by Manager for designation
of Practice Sites.
1.7 PAYMENT OF TAXES. Manager shall have the responsibility to pay
(i) all taxes (excluding taxes measured by or based upon Group income or
professional service revenue), assessments, license fees and other charges
payable that are the responsibility of the occupant of the Practice Sites which
become payable during the term of this Management Agreement; (ii) all taxes,
assessments, license fees and other charges assessed on personal property owned
by Manager relating to the operation of Group; and (iii) all other business
taxes, licenses, or fees other than those related to the professional licensure
of physicians. Notwithstanding the foregoing, if Group or any Group Physician
maintains personal property at any Practice Site,
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then Group or the Group Physician, as applicable, shall be responsible for the
payment of any taxes with respect to such property.
1.8 INSURANCE.
1.8.1 PRACTICE SITES. Manager shall procure and maintain all
insurance coverages deemed necessary by Manager for the operation of the
Practice Sites, including without limitation the following: (i) comprehensive
general liability insurance covering activities of Group naming Manager,
Manager's employees and Group as insured, (ii) general property casualty
insurance on the Practice Sites and contents owned or leased by Manager in
amounts consistent with Manager's risk management policies and (iii) workers
compensation insurance for employees of Manager and Group.
1.8.2 PROFESSIONAL LIABILITY INSURANCE. Manager, directly or
through its affiliates, shall procure and maintain, a policy or policies of
professional liability insurance providing coverage for Group and its
professional personnel. Such policy shall cover any acts of Group for the
professional negligence of its personnel which may have occurred during the term
of this Management Agreement. These policies of insurance shall be written with
limits of liability of no less than One Million Dollars ($1,000,000) per
claim/Three Million Dollars ($3,000,000) annual aggregate. Group shall
cooperate with all reasonable requests of Manager in connection with obtaining
and maintaining this coverage.
1.8.3 DIRECTORS AND OFFICERS INSURANCE. Manager, directly or
through its affiliates, shall procure and maintain, a policy or policies of
directors and officers liability insurance providing coverage for the directors,
officers and authorized agents of Group. These policies of insurance shall be
written with limits of liability of no less than Five Million Dollars
($5,000,000) per claim annual aggregate. Group shall cooperate with all
reasonable requests of Manager in connection with obtaining and maintaining this
coverage.
1.8.4 SELF INSURANCE. Notwithstanding any other provisions of
this Section 1.8, Manager may, at any time Manager deems appropriate, choose to
self insure for any or all insurance coverages for which Manager is responsible
pursuant to this Management Agreement.
1.9 NON-PROFESSIONAL PERSONNEL.
1.9.1 MANAGER TO EMPLOY; INITIAL EMPLOYMENT DECISIONS. Manager
shall provide all non-professional personnel to Group which Manager deems
reasonable and necessary for the efficient and proper operation of Group based
upon patient volume. For purposes of this Agreement, "Professional Personnel"
shall mean individuals employed by Group as physicians, optometrists,
chiropractors, podiatrists, nurse practitioners, nurse anesthetists, nurse
midwives and physician assistants.
1.9.2 SPECIAL PROVISIONS APPLICABLE TO ALLIED HEALTH
PROFESSIONALS. Manager shall adhere to appropriate credentialing and other
professional review and
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qualification standards with respect to all personnel to be employed or retained
by Manager to perform services under this Management Agreement who are licensed
or certified to practice their respective health care professions by the State
of California (hereinafter collectively referred to as "Allied Health
Professionals").
1.9.3 SUPERVISION OF CLERICAL AND OTHER NON-MEDICAL SUPPORT
PERSONNEL. Manager shall supervise all clerical and other non-medical support
personnel and the non-medical functions of all Allied Health Professionals. In
addition, Manager shall provide for periodic review and evaluation, including
input from Group, of the performance of such personnel. Manager shall establish
a procedure through which Group may request reassignment of particular personnel
for express reasons relating to job qualifications, training or performance, and
Manager shall reasonably accommodate such requests by Group which conform to
this procedure.
1.9.4 DECISIONS RESERVED TO MANAGER. Manager shall make all
hiring and firing decisions and all determinations as to those wages, salaries
and compensation, including all determinations regarding the retention,
promotion, demotion, awarding of bonuses, salary adjustments, and other matters
affecting the terms and conditions of the employment of all non-physician
personnel in accordance with and subject to personnel policies as may be adopted
and modified from time to time by Manager. Staffing levels, work hours and
shifts, and employee benefit programs shall be established and implemented by
Manager in accordance with the policies and funding arrangements developed by
Manager.
1.10 BOOKKEEPING AND ACCOUNTING SERVICES. Manager shall provide Group with
all bookkeeping and accounting services Manager deems necessary or appropriate
for the efficient and proper operation of Group. Such services shall include,
without limitation, the maintenance, custody and supervision of business
records, papers, documents, ledgers, journals and reports relating to the
business operations of Group; the establishment, administration and
implementation of accounting procedures, controls, forms and systems; the
preparation of financial reports; the planning of the business operations of the
Group; the payment of accounts payable (including claims administration and
payment) and collection of accounts receivable; the preparation of necessary
Group tax returns (as opposed to the tax returns of individual Group Physicians
which shall be the responsibility of each physician); and the administration of
the compensation formula and compensation distribution system established
pursuant to the terms of this Management Agreement.
1.11 FEE-FOR-SERVICE ADMINISTRATION. For Group Agreements which are not
subject to Section 1.12, and all care provided by Group other than under Group
Agreements, Manager shall provide the following additional administrative
services:
1.11.1 FEE SCHEDULE. Development of a "chargemaster" fee schedule
for Group and determination of the appropriateness of revisions and
modifications to the fee schedule to reflect changed circumstances, with
approval from the Joint Operating Committee, in accordance with Section 5.2 of
this Management Agreement.
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1.11.2 BILLING AND COLLECTION. Billing and collection services
that Manager determines to be necessary or appropriate in connection with
charges resulting from the rendition of professional services by Group to
Patients; such services to include, but not be limited to, collection of
payments derived from coordination of benefits, collection of payments from
third party payors, and other payments due Group. Manager shall adhere to the
then current fee schedule provisions for discounts and courtesy services to
Patients. Manager shall maintain internal accounting records of all billings to
fee-for-service Patients and third-party payors.
1.12 CAPITATION ADMINISTRATION. For Group Agreements which involve
capitated payments to Group ("Capitated Agreements"), Manager shall provide the
following additional administrative services:
1.12.1 CALCULATION OF AMOUNTS DUE. Calculation of primary care and
specialty capitation and specialty, ancillary and other payable claims of Group
based upon contracts with non-Group Physicians and to prepare checks on behalf
of Group to pay amounts due.
1.12.2 BILLING UNDER CAPITATED AGREEMENTS. Billing in Group's name
and on its behalf, (a) payors for coordination of benefits and other third party
liability payments according to the terms of the Capitated Agreements, (b)
Patients in accordance with the terms and provisions of applicable Capitated
Agreements and (c) for amounts deemed ineligible under the terms of Capitated
Agreements where permitted by such Capitated Agreements. Manager shall also
review claim and capitation expense data to monitor any other revenue receipt
programs which any of the Capitated Agreements may have or may institute, and to
seek reimbursement pursuant to Capitated Agreements.
1.12.3 RECORDS. Manager shall maintain internal accounting records
including primary care encounters and authorizations for specialist referrals
under Capitated Agreements which will identify the services provided to Patients
covered by Capitated Agreements and the compensation received therefor to enable
a determination of the fee-for-service equivalency to be made.
1.13 REVIEW AND AUDIT OF MANAGER. The annual financial statements of
Manager shall be annually audited in accordance with generally accepted
accounting standards or such other standards as may be appropriate for a
business of the size and scope of that conducted by Manager, by duly qualified
independent auditors. Copies of audited financial statements of Manager,
subject to such restrictions as may be necessary to assure the preservation of
their confidentiality, shall be made available for review by Group.
1.14 ADDITIONAL FINANCIAL AND MANAGEMENT REPORTS AND INFORMATION. Manager
shall prepare and deliver to Group, copies of the following reports:
1.14.1 INCOME STATEMENTS AND BALANCE SHEETS. Monthly income
statements and annual balance sheets of Group relating to the operation of
Group.
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1.14.2 OTHER REPORTS. Any additional financial and management
reports and information prepared by Manager which Manager determines will assist
Group in evaluating physician productivity and the efficiency or effectiveness
of the medical services provided by Group to Patients.
1.15 MANAGEMENT INFORMATION SYSTEM. Manager shall be responsible for the
development or procurement and operation of a management information system.
1.16 PHYSICIAN RECRUITMENT. Manager shall provide physician recruitment
services to Group.
1.17 HUMAN RESOURCES; CREDENTIALING. Manager shall provide any necessary
personnel and human resources services for its employees and the Group. Manager
shall provide credentialing services to the Group, in accordance with standards
established by Group.
1.18 MARKETING AND PUBLIC RELATIONS. Manager shall coordinate and provide
marketing and public relations services.
1.19 UM/QM POLICIES AND PROCEDURES; PREAUTHORIZATION. Manager shall assist
Group in the development of utilization management, quality management and risk
management policies and procedures for Group and Group Physicians. Manager
shall assist Group in the development of preauthorization protocols for the
administration of care under Capitated Agreements, other Group Agreements in
which Group is permitted to authorize care and for fee-for-service Patients.
Manager shall administer all such policies and protocols under the direction and
supervision of Group.
1.20 DISTRIBUTION OF COMPENSATION AND BONUSES TO GROUP PHYSICIANS; GROUP
BENEFITS ADMINISTRATION. Manager, on behalf of Group, shall administer the
payment of all compensation to all Group Physicians for providing services to
Patients including, without limitation, all applicable vacation pay, sick leave,
retirement benefits, social security and workers' compensation. Manager shall
also distribute to Group Physicians any bonuses or risk pool amounts from
whatever source derived, in accordance with the policies and procedures adopted
by Group. Manager shall contract for benefits on behalf of Group and administer
such benefits for Group, including any health, disability insurance and life
insurance.
1.21 ATTORNEY-IN-FACT. Group hereby constitutes and appoints Manager for
the term hereof as its true and lawful attorney-in-fact for the following
purposes:
1.21.1 DEPOSITORY ACCOUNT. To create and maintain a depository
account in the name of Group with a banking institution selected by Manager (the
"Account"). Group agrees to designate Manager as the sole party authorized to
make withdrawals from the Account, which designation may be changed only by
written notice to said institution,
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executed by both Group and Manager; withdrawals from the Account shall be made
only in accordance with the terms of Sections 1.12, 2.15 or 3.1.4 of this
Management Agreement.
1.21.2 RECEIPT OF PAYMENTS. To receive and deposit on a timely
basis capitation and other payments arising from Group Agreements, take
possession of and endorse in the name of Group all cash, notes, checks, money
orders, insurance payments, and any other instruments received as payment of
accounts receivable of Group however arising. Group shall immediately forward
to Manager in full any such payments that may come into the possession of Group.
1.21.3 BILLING/CLAIMS PROCESSING. To perform the functions
described in Sections 1.11 and 1.12.
1.21.4 COLLECTION OF OTHER AMOUNTS DUE. To collect in the name of
Group and on its behalf all other charges or fees resulting from or related to
the provision of services to Patients including but not limited to any and all
hospital incentive funds and funds from shared risk pools under any risk sharing
arrangements wherein Group is or is deemed to be the provider of medical
services.
1.21.5 STOP-LOSS CLAIMS. To review claim and capitation expense
data to monitor Patients for whom patient care expenses exceed stop-loss
deductibles under Group Agreements, and to submit with the applicable Group
Agreements or other providers of stop-loss coverage orally or in writing
reimbursement requests on behalf of Group.
1.22 COMPLIANCE WITH LAW. The obligations of Manager pursuant to this
Management Agreement shall be subject to any limitations or restrictions which
may be imposed by law or regulation, and Manager may suspend any or all
obligations hereunder in the event that it reasonably determines, upon advice of
counsel, that the performance of any obligation pursuant to this Management
Agreement may contravene applicable law or regulation, the effect of which would
be to have a material adverse effect on the business, financial condition, or
operations of Manager or any affiliate.
ARTICLE II
OBLIGATIONS OF GROUP
In providing its professional services to Patients, Group shall have the
following obligations:
2.1 GROUP PHYSICIANS AND PROFESSIONAL PERSONNEL. Group shall notify
Manager, upon execution of this Management Agreement, of the identities of the
Group Physicians and Professional Personnel (as defined in Section 1.9),
together with a list of all such individuals and their respective areas of
practice shall be attached hereto as EXHIBIT 2.1. Group shall enter into
employment agreements or contracts with all Group Physicians and Professional
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Personnel. Any new employment agreements or contracts shall be reviewed and
approved by Manager prior to execution, and Manager shall promptly be provided
with copies of the executed employment agreements and contracts and any
revisions or amendments thereto. All Group Physicians shall be licensed by the
State of California and hold staff privileges at one or more hospitals
designated by Manager as participating hospitals.
2.2 PROVISION OF MEDICAL SERVICES. Group shall perform, or subcontract to
perform as necessary, all medically necessary services for Patients in
accordance with the terms of Group Agreements and subject to the utilization
review protocols. All subcontracts shall be negotiated and executed by Manager
on behalf of Group.
2.3 ADDITIONAL PHYSICIANS. Group shall use its best efforts to provide
any additional physicians required by the level of patient activity anticipated
by Manager and communicated to Group, with the specialty mix and geographical
location specified by Manager, within a reasonable period of time.
2.4 HOURS OF SERVICE. Group shall maintain Group Physicians and
Professional Personnel at Practice Sites during the following hours of service.
Hours of service at any Practice Site shall be subject to review by the Joint
Operating Committee, in accordance with Section 5.2.
2.4.1 PATIENT MEDICAL SERVICES. Group shall provide available,
accessible and medically necessary services for Patients during regular working
hours established by Manager for each Practice Site.
2.4.2 WALK-IN AND COMMUNITY SERVICES. For walk-in and community
services, which may be provided at Practice Sites, Group shall provide (or
subcontract as necessary to provide) such services at the hours, including
extended hours, established by Manager.
2.4.3 AFTER HOURS CARE. Group shall provide (or subcontract as
necessary to provide) access to after hours services in accordance with Group
protocols and community standards of care.
2.5 NON-DISCRIMINATION; COMPLIANCE WITH LAW. All employment policies,
standards and practices of Group shall be in accordance with applicable equality
provisions of state and federal law. In the event that any government contract
or regulation requires reports or disclosures of Manager and its contractors,
Group, upon Manager's request, shall make, execute and deliver such reports,
disclosures or other written information, guarantees or assurances as may be
reasonably requested by Manager to assure timely compliance.
2.6 NON-DISCRIMINATORY PATIENT SELECTION AND SERVICES; NON-DISCRIMINATORY
PATIENT ASSIGNMENT. No Patient shall be discriminated against for any reason
prohibited by law. The Group Physicians shall also abide by the patient service
and assignment policies
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established from time to time by Manager or applicable third party payors,
including those relating to accepting Patients who select or are assigned to
Group under Group Agreements.
2.7 STANDARDS, ACCREDITATION, SURVEYS AND INSPECTIONS. Group shall meet
all medical practice, licensure and ethical standards, which are pertinent to
its activities or which by contract it has agreed to abide. Group shall in good
faith cooperate with inspections and on-site surveys of Practice Sites as may be
conducted by governmental agencies, accrediting organizations or payors.
Manager shall, to the extent possible, give Group advance notice of such
inspections and surveys and schedule them during reasonable business hours.
2.8 CONTRACTS. Group and the Group Physicians shall abide by the terms of
any Group Agreements entered into by or with Manager on behalf of Group,
including, without limitation, self-insured, PPO, EPO, HMO and indemnity
contracts.
2.9 COMPLIANCE WITH POLICIES AND PROCEDURES.
2.9.1 ORGANIZATION AND REVIEW OF CARE. Group shall comply with
policies and procedures pertinent to quality management, utilization management,
risk management, scheduling, billing, claims payment, claims adjudication,
reconciliation of payments or reimbursements, and other administrative matters
relating to the organization of the non-professional aspects of the delivery of
care as may be established by Manager from time to time.
2.9.2 UTILIZATION MANAGEMENT; QUALITY MANAGEMENT. Group shall
contractually bind each Group Physician to cooperate with and participate in the
applicable program and systems of quality management, grievance procedures, peer
review and utilization management. Information developed in the course of
physician quality assurance and peer review activities shall be maintained by
Manager as privileged and confidential except where its disclosure is assented
to by Group or is required by law.
2.9.3 PRIOR AUTHORIZATION. Group and each Group Physician agrees
to obtain prior authorization in accordance with any administrative procedures
developed in accordance with Section 1.19 or required pursuant to any
administrative procedures of third party payors in effect from time to time
before rendering any service requiring prior authorization.
2.10 RECORDS AND REPORTS. Group shall assist Manager in maintaining and,
where by law or legal process required, in divulging, records and information
concerning its health care services. Group shall give Manager full access to
all of its medical and financial records.
2.11 GROUP TO PROVIDE NECESSARY BILLING AND ENCOUNTER INFORMATION. Group
agrees to provide Manager with all billing and encounter information for
Patients, including, but not limited to the name of the patient, the date of
service, the nature and extent of services provided and any supporting medical
information, necessary to obtain payment or reimbursement for services.
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2.12 CONTINUING EDUCATION. Group Physicians shall maintain competence in,
and remain currently well-informed as to recent developments about, their
particular areas of medical practice, interest and specialization. Accordingly,
subject to Group at all times providing sufficient physicians to care for the
needs of Patients, the Group Physicians shall, in compliance with policies set
by Group and administered by Manager, attend seminars, keep current with
journals and take other reasonable steps to remain proficient in their
particular specialties. All seminars necessary to maintain licensure or
competence shall be the responsibility of the Group and the individual Group
Physician.
2.13 REFERRALS. Group and the Group Physicians shall make referrals to
specialists in a manner consistent with (a) pertinent policies and procedures
(which shall be developed in consultation with Manager), (b) the terms and
conditions of government programs or Group Agreements applicable to the care of
the Patient, and (c) any federal or state laws or regulations.
2.14 PHYSICIAN COMPENSATION. Group shall compensate Group Physicians in
accordance with a compensation formula developed in consultation with Manager.
Group shall make all final determinations as to the compensation paid to Group
Physicians.
2.15 GROUP EXPENSES. Payment of those expenses related to the operation of
Group which are designated on EXHIBIT 2.15 hereto ("Group Expenses") shall be
the sole responsibility of Group. To the extent that Manager pays or incurs any
Group Expenses, Group authorizes Manager to promptly reimburse Manager from
funds in the Account as soon as such funds become available.
2.16 PROVIDER NUMBERS. Group shall procure and maintain a medical group
provider number, including without limitation, Medicare and Medicaid provider
numbers, necessary or appropriate to obtain payment or reimbursement on Group's
behalf.
ARTICLE III
COMPENSATION OF MANAGER
3.1 MANAGEMENT FEE. For its services provided under this Management
Agreement, Manager shall be entitled to a fee (the "Management Fee"), payable
not later than ten days following the end of each calendar month during the term
of this Management Agreement, which shall be computed as the sum of the
following factors:
3.1.1 FEE FOR SERVICE REVENUES. An amount equal to 60% of all
revenues of the Group arising from the provision of services on a fee-for-
service basis (defined in accordance with Section 3.5), whether or not pursuant
to a Group Agreement.
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3.1.2 CAPITATED AGREEMENT REVENUE. An amount equal to 60% of
capitation payments or similar revenues of Group (as defined in Section 3.5)
arising from the provision of medical services pursuant to Capitated Agreements.
3.1.3 HOSPITAL RISK POOLS. An amount equal to 60% of amounts due
Group under hospital risk pool arrangements entered into by Group in accordance
with Group Agreements.
3.1.4 PAYMENT OF FEE. Manager shall be entitled to withdraw the
Management Fee from the Account maintained by Manager in accordance with Section
1.21.1. Manager shall, concurrently with any such withdrawal, provide to Group
a statement of the calculation of the Management Fee.
3.2 OVERPAYMENTS AND UNDERPAYMENTS. From time to time as necessary,
Manager shall recalculate the Management Fee if a prior payment is deemed to be
an overpayment or an underpayment due to changed circumstances impacting the
calculation of the Management Fee, such as notification by a payor under a
Capitated Agreement of prior overpayment of capitation payments.
3.3 ADVANCES TO GROUP. In the event that Manager and Group have entered
into an agreement which prescribes a minimum amount of compensation for
distribution by Group to Group Physicians in accordance with Section 2.14
("Minimum Group Compensation") and the payment of the Management Fee in
accordance with this Article III will leave Group with less than the amount of
the Minimum Group Compensation, Manager shall pay to Group an amount necessary
to provide Group with Minimum Group Compensation. Commencing January 1, 1997,
any such payment shall not be considered a reduction of the Management Fee, but
shall be an advance by Manager to Group, which shall be repaid from revenues
otherwise allocable to Group in the next succeeding monthly periods for which
Group receives at least Minimum Group Compensation.
3.4 ADJUSTMENT IN MANAGEMENT FEE. Manager shall periodically review and
have the right to adjust all or any components of the Management Fee, taking
into account such factors as the adequacy of compensation to Group and changes
in Manager's costs. In the event that Manager proposes a change in any
component of the Management Fee, Manager shall consult with the Joint Operating
Committee about the proposed change and the reasons therefor. Manager shall
advise Group at least sixty (60) days in advance of the date on which the
revised Management Fee is to be effective by a written statement which includes
the basis for the change. Any adjustments made pursuant to this Section 3.4
shall not be subject to change for at least one year.
3.5 DEFINITIONS OF GROUP REVENUE. For purposes of this Article III: (a)
fee-for-service revenue of Group shall be calculated on an accrual basis, with
gross charges for services being reduced by all allowances for bad debts,
contractual adjustments, discounts, professional courtesies and compromises or
cancellations of accounts receivable of any kind or nature, and (b) Capitated
Agreement revenue of Group shall include coordination of benefits
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payments, co-payment amounts, coinsurance amounts, withhold distributions, and
stop-loss insurance reimbursements, less amounts paid for ancillary or
professional services not provided by Group Physicians or Group, but for which
Group is responsible under the applicable Group Agreement.
ARTICLE IV
EXECUTION OF GROUP AGREEMENTS
4.1 APPOINTMENT OF MANAGER AS ATTORNEY-IN-FACT. In order to facilitate
the execution of Group Agreements and other contracts, Group hereby constitutes
and appoints Manager as attorney-in-fact for Group and the Group Physicians with
the following powers:
4.1.1 CONTRACTING GUIDELINES. The Joint Operating Committee shall
develop guidelines for Group Agreements, which guidelines shall include terms
minimally acceptable to Group for all such Agreements. Manager shall observe
the guidelines in the negotiation of Group Agreements, and in the event Manager
proposes entry into a Group Agreement which varies from the guidelines, Manager
shall seek approval of the Joint Operating Committee for such Group Agreement.
4.1.2 ENTRY INTO AGREEMENTS. To negotiate and execute in the name
of Group, all contracts or other arrangements for the provision of health care
services by Group Physicians, including Capitated Agreements.
4.1.3 ADMINISTRATION OF AGREEMENTS. To exercise such rights
respecting the administration of Group Agreements or other arrangements
negotiated by Manager pursuant to Section 4.1.2, on behalf of Group and the
Group Physicians as may reasonably be requested by the third party payor with
whom the Group Agreement is executed and as are customary in the health care
industry to facilitate the effective participation of the Group Physicians.
This Section 4.1.3 is not intended and shall not be construed to delegate any
authority to Manager to modify any term or provision of this Management
Agreement, to confess or accept any liability or obligation not authorized under
the standards respecting Group Agreements as may be established by Manager, or
to exercise any rights respecting the management of Group, the performance of
professional services by any Group Physician, or to interfere in any way with
the professional practices and prerogatives of Group or any Group Physician.
The foregoing limitation shall not, however, be construed to modify or limit any
rights or obligations of any party arising under any other provision of this
Management Agreement, or pursuant to any other contract or agreement to which
such party is bound.
4.2 RESTRICTIONS ON GROUP. Group shall not, nor shall any Group
Physician, during the term of this Management Agreement enter into any contract
or other arrangement for the provision of health care services other than those
negotiated by Manager in accordance with Section 4.1.2.
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ARTICLE V
JOINT OPERATING COMMITTEE
5.1 COMPOSITION. Manager and Group shall constitute a Joint Operating
Committee, consisting of not fewer than three (3) representatives of Group's
Board of Directors and three (3) representatives of Manager. Each party may
change its representatives on the Joint Operating Committee from time to time,
upon notice to the other.
5.2 FUNCTIONS. The Joint Operating Committee shall advise Manager on its
administration of services under this Management Agreement and Group on its
performance of professional services pursuant to this Management Agreement. The
Joint Operating Committee shall have the specific functions set forth on
EXHIBIT 5.2 attached hereto and incorporated herein by this reference. It is
intended that the Joint Operating Committee provide management support to
Manager as required and that Manager and Group have a duty to consult with, or
seek approval from, the Joint Operating Committee on those matters set forth in
EXHIBIT 5.2 or as otherwise provided in this Management Agreement.
5.3 MEETINGS. The Joint Operating Committee shall meet, upon the request
of Manager or of the representatives of Group, not less frequently than
quarterly.
5.4 RULES. The Joint Operating Committee may develop such rules and
procedures to govern its meetings and activities as its members deem necessary.
ARTICLE VI
TERM; TERMINATION
6.1 TERM; TERMINATION. The initial term of this Management Agreement
shall be twenty (20) years ("Initial Term"), commencing as of January 1, 1996
(the "Effective Date"), unless earlier terminated as hereinafter provided. At
the conclusion of the Initial Term, this Management Agreement shall be extended
for an additional ten (10) years ("First Extension"), and at the end of the
First Extension for an additional ten (10) years ("Second Extension"), unless
either Manager or Group notifies the other of its intention that the Management
Agreement terminate not later than 180 days prior to the end of (a) the Initial
Term, in the case of the First Extension or (b) the First Extension, in the case
of the Second Extension.
6.2 TERMINATION FOR CAUSE. Either party may terminate this Management
Agreement at any time for "cause", which, for purposes of this Section 6.2 shall
be defined as, and limited to, the following defaults by the other party:
6.2.1 LIQUIDATION; BANKRUPTCY. The defaulting party's application
for or consent to the appointment of a receiver, trustee or liquidator of all or
a substantial part of its
13
assets, filing of a voluntary petition in bankruptcy, making a general
assignment for the benefit of creditors, filing a petition or answer seeking
reorganization or arrangement with creditors, or taking advantage of any
insolvency, or the entry of any order, judgment or decree by any court of
competent jurisdiction on the application of a creditor or otherwise,
adjudicating such party bankrupt or approving a petition seeking reorganization
of such party or appointment of a receiver, trustee or liquidator of such party
or of all or a substantial part of its assets, and if such order, judgment or
decree shall continue unstayed and in effect for sixty (60) calendar days after
its entry. Termination under this Subsection 6.2.1 shall be effective
automatically and immediately upon the giving of written notice of termination
by the non-defaulting party.
6.2.2 BREACH. A failure by the defaulting party to perform any
material obligation required hereunder, if such default shall continue for
thirty (30) calendar days after the giving of written notice from the
nondefaulting party specifying the nature and extent of such default, or, if the
breach cannot reasonably be cured in thirty (30) days, if the breaching party
has not acted diligently, or subsequently acted diligently, to attempt to cure
the breach within the thirty (30) day period following notice from the
nondefaulting party. If the parties disagree as to the existence of a breach,
whether the breach has been cured or whether diligent efforts have been made
towards cure, the parties shall use their good faith efforts to resolve the
dispute through negotiation. Termination under this Subsection 6.2.2 shall be
effective upon the conclusion of the thirty (30) day period.
6.3 TERMINATION FOR CERTAIN TRANSACTIONS. Manager shall have the right to
terminate this Management Agreement in the event that Group, or any successor to
Group composed of 50% or more of Group Physicians, become affiliated with
another medical group, medical foundation, management services organization,
hospital or health system or third party payor, any of which Manager, in its
absolute discretion, deems a competitor, or any affiliate or agent thereof and
Group does not terminate such affiliation within thirty (30) calendar days after
the giving of written notice by Manager.
6.4 EFFECT OF TERMINATION.
6.4.1 MANAGER TO CONTINUE TO PROVIDE SERVICES. Upon termination
of this Management Agreement, Manager shall continue to collect and receive all
compensation, reimbursement and payments due for services provided to Patients
prior to the effective date of termination, subject to the rights of the parties
hereunder to cancel, forgive, waive and settle such payments due, and Manager
shall be entitled to receive from such amounts any compensation in accordance
with the terms of Article III for services rendered by Manager.
To the extent necessary under Section 6.4.2, Manager shall provide management
services to Group, in accordance with the terms of this Management Agreement,
following termination of this Management Agreement, and shall be entitled to
compensation in accordance with the terms of Article III.
6.4.2 SERVICES UNDER GROUP AGREEMENTS; CARE OF PATIENTS. To the
extent required by Group Agreements, the parties shall observe the following
covenants, notwithstanding termination of this Management Agreement:
14
6.4.2.1 GROUP AGREEMENT OBLIGATIONS. Each party shall continue
to perform services as required under the terms and conditions of any Group
Agreement in which Group and/or Manager is then participating or otherwise has
existing contractual obligations in accordance with the terms of the Group
Agreement.
6.4.2.2 CARE OF PATIENTS. Each party shall continue to perform
such services as may be required to assure adequate care and arrangements for
appropriate referrals for patients who are receiving hospital or other
institutional services or who are involved in an active regimen or course of
medical treatment or other services at the time of such termination.
6.4.2.3 COLLECTIONS. The parties shall cooperate to pursue
collection of any payments to which they may be entitled for services rendered
after the termination of this Management Agreement.
6.5 POST TERMINATION. Upon the termination of this Management Agreement:
6.5.1 PRACTICE SITES. Subject to continuing care obligations in
Section 6.4.2, Group shall surrender to Manager all Practice Sites and Equipment
and other appurtenances thereto, in good condition, excepting reasonable use and
wear thereof and damage by fire, act of God, or by the elements.
6.5.2 PROPRIETARY INFORMATION. Group shall immediately
discontinue the use of and shall promptly return all proprietary information,
manuals, and other materials associated with or respecting Manager that have
been made available to Group by reason of its participation therein and shall
return all such property, together with any copies thereof in its possession, to
Manager.
6.5.3 SOFTWARE. Group shall immediately cease to use all software
arranged for or provided by Manager and, within thirty (30) calendar days after
such termination, shall return to Manager the software, all related
documentation and computer programs and any copies thereof.
6.5.4 ACCESS TO MEDICAL RECORDS. Group shall provide to Manager
access, at reasonable times and upon reasonable request, to Group's medical
records relating to Patients for a period not shorter than the applicable
statute of limitations for any claim which may be asserted against Manager
arising from its activities pursuant to this Management Agreement.
6.5.5 COVENANT NOT TO COMPETE. For a period of one (1) year
following the termination of this Agreement Group shall not, directly or
indirectly engage in the provision of medical care within a three (3) mile
radius of any of the Practice Sites, and no Group Physician shall engage in the
provision of medical care within a three (3) mile radius of the Practice Site at
which they practiced prior to termination. The parties agree that the duration,
area and scope of activities restricted hereunder are reasonable and necessary
to
15
protect Manager's legitimate business interests. In the event that a court or
arbitrator shall determine that this covenant is unenforceable because of its
area, duration or prohibited scope of activities, this covenant shall be
construed, in a manner consistent with applicable law, to provide the maximum
restriction on the post termination activities of Group and Group Physicians.
ARTICLE VII
RELATIONSHIP OF THE PARTIES
7.1 NO FIDUCIARY DUTIES. None of the provisions of this Management
Agreement are intended to create, nor shall be deemed or construed to create,
any fiduciary duty between the parties or any relationship between the parties
other than that of independent parties contracting with each other hereunder
solely for the purpose of effecting the provisions of this Management Agreement.
The parties are not, and shall not be construed to be in a relationship of joint
venturers, partners or employer-employee.
7.2 EXCLUSIVITY.
7.2.1 PHYSICIAN SERVICES. During the term of this Management
Agreement, neither Group nor any Group Physician shall provide any medical
services except in accordance with the terms of this Management Agreement. A
Group Physician who terminates employment by Group shall be relieved of this
obligation, except that for a period of one (1) year following termination of
employment, such Group Physician shall not practice medicine or solicit any
Patient of Group served at the Practice Site for the purpose of treating such
patient at a medical facility within a three (3) mile radius of such Practice
Site. The parties agree that the duration, area and scope of activities
restricted hereunder are reasonable and necessary to protect Manager's
legitimate business interests. In the event that a court or arbitrator shall
determine that this covenant is unenforceable because of its area, duration or
prohibited scope of activities, this covenant shall be construed, in a manner
consistent with applicable law, to provide the maximum restriction on the
activities of Group and Group Physicians. Manager shall not, during the term of
this Agreement, contract with any physician or group of physicians to provide
services at a Practice Site or within a three (3) mile radius of a Practice
Site, unless Manager offers Group the opportunity to Group to provide the
services and Group declines to provide Group Physicians or hire new physicians
necessary to provide the requested services.
7.2.2 MANAGEMENT SERVICES. During the term of this Management
Agreement, neither Group nor any Group Physician shall contract or arrange to
receive any services described in Article I (or any services substantially
similar to them) from any entity or person other than Manager. To the extent
that Group may require any service other than those described in Article I,
Group shall request such services from Manager, and Manager shall use reasonable
efforts to provide such service to Group.
16
7.2.3 EXPANSION OF SERVICE AREA. In the event that Manager
determines to add Practice Sites or arrange to expand the services or service
area for which it contracts (an "Expansion"), it shall propose the Expansion to
the Joint Operating Committee and Group. In the event that Group declines to
provide Group Physicians or to add new physicians to provide necessary medical
services for the Expansion, then Manager may contract with other physicians or
groups to provide medical services for the Expansion.
ARTICLE VIII
MISCELLANEOUS
8.1 NOTICES. All notices to be given under this Management Agreement
shall be in writing and may be personally served upon the parties hereto or may
be served by depositing the same in the United States mail, postage prepaid, as
follows:
Manager: Talbert Medical Management Corporation
9900 Talbert Avenue
Fountain Valley, CA 92708
Attn:__________________________
Group: Talbert Medical Group, Inc.
___________________________
___________________________
Attn:___________________________
subject to the right of either party to change said address or addresses by
written notice of such new address to the other party.
8.2 PROPRIETY PROPERTY. Manager is and shall be the sole owner and holder
of all right, title and interest to the "Proprietary Property of Manager"
consisting of all copyright, service mark and trademark rights and interests in
the logo, systems, software, forms, form contracts, policy manuals, marketing
and public relations materials relating to the delivery system for the Group.
Group agrees that is shall not at any time knowingly harm, misuse or bring into
disrepute the Proprietary Property of Manager.
8.3 CONFIDENTIALITY. The terms of this Management Agreement are
confidential and shall not be disclosed except as necessary to the performance
of this Management Agreement or as required by law. Neither Group nor Group
Physicians shall disseminate or publish information developed under this
Management Agreement or contained in reports to be furnished pursuant to this
Management Agreement without prior written approval of Manager.
8.4 ENTIRE AGREEMENT. The provisions of this Management Agreement and any
exhibits hereto and any writing signed by the party to be charged
contemporaneously herewith
17
constitute the entire agreement between the parties, and supersede any prior
negotiations, understandings or agreements.
8.5 MODIFICATIONS. This Management Agreement may be amended, modified or
otherwise changed only upon the written consent of the parties hereto.
8.6 THIRD PARTY RIGHTS. This Management Agreement shall not be construed
as conferring upon any third party any right or benefit and any and all claims
which may arise hereunder may be enforced solely by Group or by Manager.
8.7 NO ASSIGNMENT. No party may assign its rights or delegate its
obligations under this Management Agreement without the prior written consent of
the other party; provided that Manager may assign its rights and obligations
under this Management Agreement to an affiliate, successor or a wholly-owned
subsidiary without the consent of Group.
8.8 GOVERNING LAW; ARBITRATION. This Management Agreement shall be
governed by ________ law. Any dispute between the parties shall be settled by
binding arbitration in accordance with the commercial arbitration rules of the
American Arbitration Association. No punitive damages shall be awarded in any
such arbitration. The prevailing party in any such arbitration shall be
entitled to the recovery of reasonable attorneys' fees (including charges for
in-house counsel) and costs.
8.9 DOCUMENTS; NECESSARY ACTS. Each of the parties shall execute and
deliver all documents, papers, and instruments and perform such other acts as
may be necessary or convenient to carry out the terms of this Management
Agreement.
8.10 NON-WAIVER; BREACH. Any waiver of any term and condition hereof must
be in writing and signed by the party against whom it is sought to be asserted.
A party's neglect or failure in any case or circumstance to require performance
of the other party's obligations or to enforce its rights in the event of a
breach by the other party shall not affect such party's right to enforce such
rights and obligations in any other case or circumstance. A waiver of any
individual term or condition shall not be construed as a waiver of any other
term or condition nor, unless so provided in such written waiver, of the term or
condition thereby waived in the event of a future or continuing breach by the
other party, except in the particular circumstance(s) in or for which such
waiver was provided.
8.11 SEVERABILITY; INVALIDITY OF ANY PROVISION. Nothing contained in this
Management Agreement shall be construed so as to require the commission of an
act contrary to law, and whenever there is any conflict between any provision of
this Management Agreement and any present statute, law, ordinance or regulation
contrary to which the parties have no legal right to contract, the latter shall
prevail. In such event, and in any case in which any provision of this
Management Agreement is determined by a court of competent jurisdiction to be in
violation of a statute, law, ordinance, or regulation, the affected provision(s)
shall be curtailed and limited only to the extent necessary to bring it within
the
18
requirements of the law and, insofar as possible under the circumstances, to
carry out the purposes of this Management Agreement.
8.12 CAPTIONS AND HEADINGS. The captions and headings in this Management
Agreement are intended for convenience only and are not to be interpreted as
part of this Agreement.
8.13 FORCE MAJEURE. Neither party shall be liable nor deemed to be in
default for any delay or failure in performance under this Management Agreement
or other interruption of service or employment deemed resulting, directly or
indirectly, from acts of God, civil or military authority, acts of public enemy,
war, accidents, fires, explosions, earthquakes, floods, failure of
transportation, machinery or supplies, vandalism, strikes or other work
interruptions beyond the reasonable control of either party. However, both
parties shall make good faith efforts to perform under this Management Agreement
in the event of any such circumstances.
8.14 MEDICARE AND MEDICAID PATIENTS. Manager and Group agree to generate
such records and make such disclosures as may be required, from time to time, by
the Medicare, Medicaid and other third party payment programs with respect to
their participation in this Management Agreement and the rendition of services
hereunder, in order to assure that both parties will be able to meet all
requirements for participation and payment associated with such programs,
including but not limited to the matters covered by Section 1861(v)(1)(I) of the
Social Security Act. If either party is requested to disclose books, documents,
or records pursuant to any provision of this Section 8.14 for an audit, it shall
notify the other party of the nature and scope of such request and each party
shall make available, upon written request of the other, all such books,
documents, or records, during such party's regular business hours.
EXECUTION
IN WITNESS WHEREOF, the parties hereto have executed this Management
Agreement on the day and year first written above.
TALBERT MEDICAL MANAGEMENT
CORPORATION ("Manager")
By:
----------------------------------
Name:
---------------------------------
Title:
--------------------------------
TALBERT MEDICAL GROUP, INC. ("Group")
By:
----------------------------------
Name:
---------------------------------
19
Title:
--------------------------------
20
EXHIBIT 1.1
PRACTICE SITES
21
EXHIBIT 2.1
GROUP PHYSICIANS AND PROFESSIONAL PERSONNEL
22
EXHIBIT 2.15
GROUP EXPENSES
1. Group Physician personal expenditures, including licensure costs,
continuing medical education allowances, sabbatical allowances and auto
allowances.
2. Group Physician personal equipment and furnishings, including beepers,
telephone equipment, white coats, and stethoscopes.
3. Meals related to Group activities and meetings.
4. Books and periodicals for Group Physicians.
5. Off-site meetings of Group Physicians.
23
EXHIBIT 5.2
JOINT OPERATING COMMITTEE FUNCTIONS
1. Develop strategy for new business, network development, new Practice Sites,
capital budgeting, marketing, and Group Agreements.
2. Evaluate and monitor operational parameters for assuring ongoing success
including but not limited to financial performance, utilization trends,
medical center operations, and overall quality of care.
3. Address problem areas or opportunities which may be raised by either of the
two entities. Where problems are identified which can not be solved at the
medical center level, the Joint Operating Committee will resolve and
implement appropriate remedial action. Decisions will be made by majority
vote with a quorum present, which majority shall consist of a majority of
Group representatives and Manager representatives.
4. Ensure that all responsibilities are identified and accounted for, and any
unnecessary duplication of effort shall be avoided by both the Group and
the Manager.
5. Ensure that communication between the Group and the Manager and between the
staff of these two entities is clear and unambiguous and that a consistent
and uniform perspective is presented to the patients, employees, and
external service partners.
24
TABLE OF CONTENTS
PAGE
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ARTICLE I RESPONSIBILITIES OF MANAGER . . . . . . . . . . . . . . . . . 1
1.1 Practice Sites . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Utilities, Building Services, and Supplies . . . . . . . . . . . . 2
1.3 Equipment, Furniture and Furnishings . . . . . . . . . . . . . . . 2
1.4 Repair and Maintenance of Practice Sites and Equipment . . . . . . 2
1.4.1 Repair and Maintenance of Practice Sites . . . . . . . . 2
1.4.2 Repair and Maintenance of Equipment. . . . . . . . . . . 2
1.5 Replacement Equipment. . . . . . . . . . . . . . . . . . . . . . . 2
1.6 Signs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.7 Payment of Taxes . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.8 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.8.1 Practice Sites . . . . . . . . . . . . . . . . . . . . . 3
1.8.2 Professional Liability Insurance . . . . . . . . . . . . 3
1.8.3 Directors and Officers Insurance . . . . . . . . . . . . 3
1.8.4 Self Insurance . . . . . . . . . . . . . . . . . . . . . 3
1.9 Non-Professional Personnel . . . . . . . . . . . . . . . . . . . . 3
1.9.1 Manager to Employ; Initial Employment Decisions. . . . . 3
1.9.2 Special Provisions Applicable to Allied Health
Professionals. . . . . . . . . . . . . . . . . . . . . . 3
1.9.3 Supervision of Clerical and Other Non-Medical Support
Personnel. . . . . . . . . . . . . . . . . . . . . . . . 4
1.9.4 Decisions Reserved to Manager. . . . . . . . . . . . . . 4
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1.10 Bookkeeping and Accounting Services. . . . . . . . . . . . . . . . 4
1.11 Fee-For-Service Administration . . . . . . . . . . . . . . . . . . 4
1.11.1 Fee Schedule . . . . . . . . . . . . . . . . . . . . . . 4
1.11.2 Billing and Collection . . . . . . . . . . . . . . . . . 4
1.12 Capitation Administration. . . . . . . . . . . . . . . . . . . . . 5
1.12.1 Calculation of Amounts Due . . . . . . . . . . . . . . . 5
1.12.2 Billing Under Capitated Agreements . . . . . . . . . . . 5
1.12.3 Records. . . . . . . . . . . . . . . . . . . . . . . . . 5
1.13 Review and Audit of Manager. . . . . . . . . . . . . . . . . . . . 5
1.14 Additional Financial and Management Reports and Information. . . . 5
1.14.1 Income Statements and Balance Sheets . . . . . . . . . . 5
1.14.2 Other Reports. . . . . . . . . . . . . . . . . . . . . . 5
1.15 Management Information System. . . . . . . . . . . . . . . . . . . 6
1.16 Physician Recruitment. . . . . . . . . . . . . . . . . . . . . . . 6
1.17 Human Resources; Credentialing . . . . . . . . . . . . . . . . . . 6
1.18 Marketing and Public Relations . . . . . . . . . . . . . . . . . . 6
1.19 UM/QM Policies and Procedures; Preauthorization. . . . . . . . . . 6
1.20 Distribution of Compensation and Bonuses to Group Physicians; Group
Benefits Administration. . . . . . . . . . . . . . . . . . . . . . 6
1.21 Attorney-in-Fact . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.21.1 Depository Account . . . . . . . . . . . . . . . . . . . 6
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1.21.2 Receipt of Payments. . . . . . . . . . . . . . . . . . . 6
1.21.3 Billing/Claims Processing. . . . . . . . . . . . . . . . 7
1.21.4 Collection of Other Amounts Due. . . . . . . . . . . . . 7
1.21.5 Stop-Loss Claims . . . . . . . . . . . . . . . . . . . . 7
1.22 Compliance with Law. . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE II OBLIGATIONS OF GROUP . . . . . . . . . . . . . . . . . . 7
2.1 Group Physicians and Professional Personnel. . . . . . . . . . . . 7
2.2 Provision of Medical Services. . . . . . . . . . . . . . . . . . . 8
2.3 Additional Physicians. . . . . . . . . . . . . . . . . . . . . . . 8
2.4 Hours of Service . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.4.1 Patient Medical Services . . . . . . . . . . . . . . . . 8
2.4.2 Walk-In and Community Services . . . . . . . . . . . . . 8
2.4.3 After Hours Care . . . . . . . . . . . . . . . . . . . . 8
2.5 Non-discrimination; Compliance with Law. . . . . . . . . . . . . . 8
2.6 Non-discriminatory Patient Selection and Services; Non-discriminatory
Patient Assignment . . . . . . . . . . . . . . . . . . . . . . . . 8
2.7 Standards, Accreditation, Surveys and Inspections. . . . . . . . . 8
2.8 Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.9 Compliance with Policies and Procedures. . . . . . . . . . . . . . 9
2.9.1 Organization and Review of Care. . . . . . . . . . . . . 9
2.9.2 Utilization Management; Quality Management . . . . . . . 9
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2.9.3 Prior Authorization. . . . . . . . . . . . . . . . . . . 9
2.10 Records and Reports. . . . . . . . . . . . . . . . . . . . . . . . 9
2.11 Group to Provide Necessary Billing and Encounter Information . . . 9
2.12 Continuing Education . . . . . . . . . . . . . . . . . . . . . . . 9
2.13 Referrals. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.14 Physician Compensation . . . . . . . . . . . . . . . . . . . . . . 10
2.15 Group Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.16 Provider Numbers . . . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE III COMPENSATION OF MANAGER . . . . . . . . . . . . . . . . . . . 10
3.1 Management Fee . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.1.1 Fee for Service Revenues . . . . . . . . . . . . . . . . 10
3.1.2 Capitated Agreement Revenue. . . . . . . . . . . . . . . 10
3.1.3 Hospital Risk Pools. . . . . . . . . . . . . . . . . . . 10
3.1.4 Payment of Fee . . . . . . . . . . . . . . . . . . . . . 11
3.2 Overpayments and Underpayments . . . . . . . . . . . . . . . . . . 11
3.3 Advances to Group. . . . . . . . . . . . . . . . . . . . . . . . . 11
3.4 Adjustment in Management Fee . . . . . . . . . . . . . . . . . . . 11
3.5 Definitions of Group Revenue . . . . . . . . . . . . . . . . . . . 11
ARTICLE IV EXECUTION OF GROUP AGREEMENTS . . . . . . . . . . . . . . . . 12
4.1 Appointment of Manager as Attorney-in-Fact . . . . . . . . . . . . 12
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4.1.1 Contracting Guidelines.. . . . . . . . . . . . . . . . . 12
4.1.2 Entry Into Agreements. . . . . . . . . . . . . . . . . . 12
4.1.3 Administration of Agreements . . . . . . . . . . . . . . 12
4.2 Restrictions on Group. . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE V JOINT OPERATING COMMITTEE . . . . . . . . . . . . . . . . . . 13
5.1 Composition. . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.2 Functions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.3 Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.4 Rules. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE VI TERM; TERMINATION . . . . . . . . . . . . . . . . . . . . . . 13
6.1 Term; Termination. . . . . . . . . . . . . . . . . . . . . . . . . 13
6.2 Termination for Cause. . . . . . . . . . . . . . . . . . . . . . . 13
6.2.1 Liquidation; Bankruptcy. . . . . . . . . . . . . . . . . 13
6.2.2 Breach . . . . . . . . . . . . . . . . . . . . . . . . . 14
6.3 Termination for Certain Transactions . . . . . . . . . . . . . . . 14
6.4 Effect of Termination. . . . . . . . . . . . . . . . . . . . . . . 14
6.4.1 Manager to Continue to Provide Services. . . . . . . . . 14
6.4.2 Services Under Group Agreements; Care of Patients. . . . 14
6.4.2.1 Group Agreement Obligations . . . . . . . . . . 15
6.4.2.2 Care of Patients. . . . . . . . . . . . . . . . 15
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6.4.2.3 Collections . . . . . . . . . . . . . . . . . . 15
6.5 Post Termination . . . . . . . . . . . . . . . . . . . . . . . . . 15
6.5.1 Practice Sites . . . . . . . . . . . . . . . . . . . . . 15
6.5.2 Proprietary Information. . . . . . . . . . . . . . . . . 15
6.5.3 Software . . . . . . . . . . . . . . . . . . . . . . . . 15
6.5.4 Access to Medical Records. . . . . . . . . . . . . . . . 15
6.5.5 Covenant Not to Compete. . . . . . . . . . . . . . . . . 15
ARTICLE VII RELATIONSHIP OF THE PARTIES . . . . . . . . . . . . . . . . . 16
7.1 No Fiduciary Duties. . . . . . . . . . . . . . . . . . . . . . . . 16
7.2 Exclusivity. . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
7.2.1 Physician Services.. . . . . . . . . . . . . . . . . . . 16
7.2.2 Management Services. . . . . . . . . . . . . . . . . . . 16
7.2.3 Expansion of Service Area. . . . . . . . . . . . . . . . 16
ARTICLE VIII MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . 17
8.1 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
8.2 Propriety Property . . . . . . . . . . . . . . . . . . . . . . . . 17
8.3 Confidentiality. . . . . . . . . . . . . . . . . . . . . . . . . . 17
8.4 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . 17
8.5 Modifications. . . . . . . . . . . . . . . . . . . . . . . . . . . 18
8.6 Third Party Rights . . . . . . . . . . . . . . . . . . . . . . . . 18
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8.7 No Assignment. . . . . . . . . . . . . . . . . . . . . . . . . . . 18
8.8 Governing Law; Arbitration . . . . . . . . . . . . . . . . . . . . 18
8.9 Documents; Necessary Acts. . . . . . . . . . . . . . . . . . . . . 18
8.10 Non-Waiver; Breach . . . . . . . . . . . . . . . . . . . . . . . . 18
8.11 Severability; Invalidity of Any Provision. . . . . . . . . . . . . 18
8.12 Captions and Headings. . . . . . . . . . . . . . . . . . . . . . . 19
8.13 Force Majeure. . . . . . . . . . . . . . . . . . . . . . . . . . . 19
8.14 Medicare and Medicaid Patients . . . . . . . . . . . . . . . . . . 19
Exhibit 1.1 PRACTICE SITES . . . . . . . . . . . . . . . . . . . . . 20
Exhibit 2.1 GROUP PHYSICIANS AND PROFESSIONAL PERSONNEL. . . . . . . 21
Exhibit 2.15 GROUP EXPENSES . . . . . . . . . . . . . . . . . . . . . 22
Exhibit 5.2 JOINT OPERATING COMMITTEE FUNCTIONS. . . . . . . . . . . 23
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