PACIFICARE OF CALIFORNIA
MEDICAL GROUP SERVICES AGREEMENT
(TALBERT)
THIS MEDICAL GROUP SERVICES AGREEMENT (this "Agreement") is made and
entered into this 6th day of November, 1996, by and between PACIFICARE OF
CALIFORNIA ("Health Plan"), and TALBERT MEDICAL GROUP, INC. ("Medical Group")
with reference to the following facts:
WHEREAS, Health Plan operates various prepaid health plans for the
provision of Covered Services to persons enrolled as Members in such plans in a
manner consistent with the laws of the State of California and the United
States; and
WHEREAS, Medical Group and its Participating Providers desire to
participate in Health Plan's prepaid health service delivery system by providing
or arranging for Covered Services to Medical Group Members on a prepaid basis in
coordination with Health Plan and its Participating Providers under the terms
specified in this Agreement; and
NOW, THEREFORE, it is agreed as follows:
ARTICLE 1
DEFINITIONS
Whenever used in this Agreement, the following terms shall have the definitions
contained in this Article 1:
1.1 ACCREDITATION ORGANIZATION is any organization, including, without
limitation, the National Committee for Quality Assurance (NCQA), engaged in
accrediting or certifying Health Plan, any Managed Care Plans, or any
Participating Providers.
1.2 AGREEMENT is this Medical Group Services Agreement between Health Plan
and Medical Group, and any amendments, exhibits and attachments hereto,
including Product Attachments.
1.3 BASE AGREEMENT is this Medical Group Services Agreement between Health
Plan and Medical Group, and any amendments, exhibits and attachments
hereto, excluding Product Attachments.
1.4 CAPITATION PAYMENTS are monthly payments made to Medical Group on a
prepaid basis for Covered Services provided or arranged by Medical Group
under this Agreement.
1.5 COMMENCEMENT DATE shall be the first day of the month following the date
set forth in the first paragraph of this Agreement.
1.6 COPAYMENT is a fee that may be charged to Members for certain Medical
Group Services and collected by Medical Group or its Participating
Providers at the time Medical Group Services are provided, as set forth in
the applicable Managed Care Plan.
1.7 COST OF CARE is the valuation of Medical Group Services and other
health care services provided or arranged by Medical Group, as described in
Section 5.8 and EXHIBIT 1 to the Base Agreement.
1.8 COVERED SERVICES are those medically necessary health care services,
supplies and benefits which are required by a Member as determined by
Medical Group or Health Plan in accordance with the Member's Managed Care
Plan and Health Plan's Quality Improvement Program and Utilization
Management Program. For purposes of this Agreement, "medically necessary"
shall have the meaning set forth in the applicable Subscriber Agreement.
1.9 DIVISION OF FINANCIAL RESPONSIBILITY is the matrix for each Managed
Care Plan which specifies either: (i) the financial responsibility of
Health Plan, Medical Group and Hospital for Covered Services, where both
Medical Group and Hospital are capitated by Health Plan for providing or
arranging Covered Services for Medical Group Members; or (ii) the financial
responsibility of Health Plan and Medical Group for Covered Services and
Covered Services that are Hospital Services, where Medical Group is
capitated by Health Plan and Hospitals are paid on non-capitated basis by
Health Plan for providing or arranging Covered Services to Medical Group
Members. The Division of Financial Responsibility for each Managed Care
Plan is set forth in the applicable Product Attachment.
1.10 ELIGIBILITY LIST is the list of Members for whom Medical Group shall
provide or arrange Covered Services.
1.11 EMERGENCY is the sudden and unexpected onset or occurrence of a
symptom, illness, medical condition or injury which requires immediate
diagnosis and/or treatment in order to alleviate or attempt to prevent
severe pain, permanent disability, serious medical complications or loss of
life. The final determination of whether an Emergency existed shall be
made by the Health Plan Medical Director or designee, subject to appeal
under the applicable Member appeals procedure.
1.12 EMERGENCY SERVICES are Covered Services required by a Member for the
diagnosis and treatment of an Emergency.
1.13 GOVERNMENT AGENCY shall mean any local, state or federal government
agency or entity with regulatory or other authority over Health Plan, this
Agreement or any Managed Care Plan.
1.14 HOSPITAL(S) are the licensed acute care hospitals which have entered
into written agreements with Health Plan to provide Hospital Services to
Medical Group Members in the Medical Group Risk Area on either a capitated
basis or a non-capitated basis. Hospitals which are capitated by Health
Plan for Medical Group Members are identified on EXHIBIT 1 to the Base
Agreement.
1.15 HOSPITAL SERVICES are either: (i) Covered Services for Medical Group
Members assigned to Hospital which are the financial responsibility of
Hospital, as specified in the Division of Financial Responsibility for each
Managed Care Plan, where Hospital is capitated by Health Plan for such
Covered Services; or (ii) Covered Services for Medical Group Members which
are initially paid for by Health Plan and are the shared financial
responsibility of Health Plan and Medical Group, as specified in the
Hospital Incentive Programs set forth in the Product Attachments and
summarized in the Division of Financial Responsibility, where Hospitals are
paid on per diem basis for such Covered Services.
1.16 MANAGED CARE PLAN is any one of the various health benefit plans or
products sponsored or administered by Health Plan or its subsidiaries or
affiliates including, without limitation, a commercial prepaid plan
("Commercial Plan"), a commercial point-of-service plan ("Commercial POS
Plan"), a Medicare-risk plan ("Medicare Plan") and a Medicare-risk point-
of-service plan ("Medicare POS Plan"). Each Managed Care Plan is described
in the applicable Subscriber Agreement and Product Attachment. Health Plan
may make available some, and not all, of the Managed Care Plans under this
Agreement.
1.17 MEDICAL GROUP MEMBERS are the Members listed on the Eligibility List.
1.18 MEDICAL GROUP RISK AREA is the geographic area within a thirty (30)
mile radius of each Medical Group facility. Such radius commences with the
address of Medical Group facility and extends for thirty (30) miles over
the shortest route using public streets and highways.
1.19 MEDICAL GROUP SERVICES are Covered Services for Medical Group Members
which are the financial responsibility of Medical Group, as specified in
the Division of Financial Responsibility for each Managed Care Plan.
1.20 MEMBER is an individual who is enrolled in a Managed Care Plan and
meets all the eligibility requirements for membership in the Managed Care
Plan and for whom the applicable Premium has been received by Health Plan.
1.21 OUT-OF-AREA MEDICAL SERVICES are those Urgently Needed Services and
Emergency Services provided while a Medical Group Member is outside the
Medical Group Risk Area which would have been the financial responsibility
of Medical Group had such services been provided within the Medical Group
Risk Area.
1.22 PARTICIPATING PROVIDERS are (i) physicians and health care
professionals who are shareholders, partners or employees of Medical Group
and (ii) physicians, medical groups, individual practice associations
("IPA"), health care professionals, hospitals, facilities and other
providers of health care services or supplies that have entered into
written contracts with Health Plan, Medical Group or Hospital to provide
Covered Services to Members pursuant to Managed Care Plans.
1.23 PREMIUM is the payment for Covered Services under each Managed Care
Plan as may be further defined in the applicable Product Attachment.
1.24 PRIMARY CARE PHYSICIAN is any of Medical Group's Participating
Providers who meet Health Plan's criteria for providing initial and primary
care Covered Services to Members, for maintaining the continuity of patient
care, and for initiating and coordinating referrals for Covered Services to
Members.
1.25 PRODUCT ATTACHMENTS are the attachments to the Base Agreement which
set forth the terms and conditions under which Medical Group shall provide
or arrange Covered Services to Medical Group Members pursuant to the
Managed Care Plans. The Product Attachments are described in EXHIBIT 2 to
the Base Agreement. All Product Attachments are a part of this Agreement
and are incorporated herein.
1.26 PROVIDER MANUAL is the Health Plan Provider Policies and Procedures
Manual and related written materials which shall be provided to Medical
Group by Health Plan prior to or concurrent with the execution of this
Agreement. The Provider Manual is incorporated into this Agreement, and
may be updated from time to time by Health Plan as provided in this
Agreement.
1.27 QUALITY MANAGEMENT AND IMPROVEMENT ("QI") PROGRAM are those standards,
protocols, policies and procedures adopted by Health Plan to monitor and
improve the quality of clinical care and quality of services provided to
Members. The QI Program is described in the Provider Manual, and may be
updated from time to time by Health Plan as provided in this Agreement.
1.28 STATE AND FEDERAL LAW shall mean any and all laws and regulations of
the State of California or of the United States which are applicable to
Health Plan, this Agreement, Managed Care Plans, and Medical Group and its
Participating Providers.
1.29 SUBSCRIBER AGREEMENT is the contract between Health Plan and a
Subscriber or Subscriber Group which describes the costs, benefits or
services, procedures, conditions, limitations, exclusions, and other
obligations to which Members are entitled and subject to under a Managed
Care Plan. A copy of the current standard form Subscriber Agreement for
each Managed Care Plan shall be provided to Medical Group by Health Plan
concurrent with the execution of each Product Attachment, and may be
updated from time to time by Health Plan.
1.30 SUBSCRIBER OR SUBSCRIBER GROUP is the individual or employer,
organization, firm or other entity which contracts with Health Plan under
a Subscriber Agreement to obtain the benefits of a Managed Care Plan.
1.31 URGENTLY NEEDED SERVICES are Covered Services under a Managed Care
Plan which are required without delay in order to prevent the serious
deterioration of a Member's health as a result of an unforeseen illness
or injury while the Member is temporarily outside the Health Plan Service
Area (that is, the geographic area in which Health Plan is licensed in
the State of California to offer each Managed Care Plan).
1.32 UTILIZATION MANAGEMENT ("UM") PROGRAM are those standards,
protocols, policies and procedures adopted by Health Plan regarding the
management, review and approval of the provision of Covered Services to
Members. The UM Program is described in the Provider Manual, and may be
updated from time to time by Health Plan as provided in this Agreement.
ARTICLE 2
DUTIES OF MEDICAL GROUP
2.1 PROVIDE OR ARRANGE COVERED SERVICES. Medical Group, through its
Participating Providers, shall provide or arrange Covered Services in the
Medical Group Risk Area to Medical Group Members, in coordination with
Health Plan and Health Plan's Participating Providers and in accordance
with the terms and conditions set forth in this Agreement and the Managed
Care Plans. Medical Group shall be financially responsible for Medical
Group Services. The primary concern of Medical Group and its
Participating Providers under this Agreement shall be the quality of
Covered Services provided to or arranged for Members. Nothing stated in
this Agreement shall be interpreted to diminish this responsibility.
2.2 PROFESSIONAL STANDARDS. All Covered Services provided or arranged by
Medical Group shall be provided or arranged by duly licensed, certified
or otherwise authorized professional personnel and at physical facilities
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 Health Plan's
QI Program and UM Program, (iii) the requirements of State and Federal
Law and (iv) the standards of Accreditation Organizations.
2.2.1 LICENSURE OF MEDICAL GROUP. Medical Group is legally organized
and incorporated under the laws of the State of California. Medical
Group shall maintain in good standing at all times during the term of
this Agreement any and all licenses, certificates and/or approvals
required under State and Federal Law for the performance by Medical
Group of the duties required by this Agreement.
2.2.2 LICENSURE/CERTIFICATION OF MEDICAL GROUP'S PARTICIPATING
PROVIDERS. ach of Medical Group's Participating Providers shall
maintain in good standing at all times during the term of this
Agreement the necessary licenses or certifications required by State
and Federal Law and by the Managed Care Plans to provide or arrange
Covered Services to Members.
2.2.3 HOSPITAL PRIVILEGES FOR MEDICAL GROUP'S PARTICIPATING PROVIDERS.
Unless otherwise specified by Medical Group and approved by Health
Plan for specific Participating Providers, each of Medical Group's
Participating Providers who is a physician shall maintain in good
standing at all times during the term of this Agreement medical staff
membership and clinical privileges at Hospital necessary to provide or
arrange Covered Services to Members.
2.3 MEDICAL GROUP'S PARTICIPATING PROVIDERS. Medical Group shall have a
sufficient number of Participating Providers throughout the Medical Group
Risk Area to provide or arrange Covered Services and meet the needs of
Health Plan and Medical Group Members as determined by Health Plan's QI
Program and in accordance with State and Federal Law. Medical Group's
Participating Providers shall provide or arrange Covered Services,
including Emergency Services, to Medical Group Members twenty four (24)
hours a day, three hundred sixty five (365) days per year. Medical
Group's Participating Providers must meet Health Plan's credentialing
standards and must be approved by Health Plan before providing or
arranging Covered Services to Members.
2.3.1 PARTICIPATING PROVIDER INFORMATION. Medical Group shall
provide Health Plan with a complete list of its Participating
Providers, together with the provider specific information required by
Health Plan for credentialing and for administration of the Managed
Care Plans, at the time this Agreement is signed.
2.3.2 NOTICE OF PARTICIPATING PROVIDER ADDITIONS. Medical Group
shall use its best efforts to provide at least sixty (60) calendar days
prior written notice to Health Plan of the addition of any new
Participating Providers. Such notice shall include the provider
specific information required by Health Plan, as set forth in the
Provider Manual. All new Participating Providers must be approved by
Health Plan before providing or arranging Covered Services to Members.
Health Plan shall use its best efforts to approve new Participating
Providers as quickly as possible after receiving the written notice
from Medical Group.
2.3.3 NOTICE OF PARTICIPATING PROVIDER TERMINATIONS. Medical Group
shall provide sixty (60) calendar days prior written notice to Health
Plan of the termination of any of its Participating Providers;
provided, however, that if any Participating Providers are terminated
with less than sixty (60) calendar days notice, then Medical Group
shall provide written notice to Health Plan as soon as Medical Group
becomes aware of such termination.
2.3.4 RESTRICTION, SUSPENSION OR TERMINATION OF PARTICIPATING
PROVIDERS. Medical Group shall, as warranted, immediately restrict,
suspend or terminate its Participating Providers from providing or
arranging Covered Services to Members in the following circumstances:
(i) the Participating Provider ceases to meet the
licensing/certification requirements or other professional standards
described in this Agreement; (ii) Health Plan or Medical Group
reasonably determines that there are serious deficiencies in the
professional competence, conduct or quality of care of the
Participating Provider which affects or could adversely affect the
health or safety of Members; or (iii) Health Plan reasonably demands
that the Participating Provider be restricted, suspended or
terminated. Medical Group shall immediately notify Health Plan of any
of its Participating Providers who cease to meet the
licensing/certification requirements or other professional standards
described in this Agreement and Medical Group's actions under this
Section. If Medical Group fails to act as required by this Section
with respect to any of its Participating Providers, Health Plan shall
have the right to immediately prohibit such Participating Providers
from continuing to provide Covered Services to Members.
2.3.5 CHANGES IN CAPACITY. Medical Group and its Participating
Providers will continue to accept Members enrolled by Health Plan for
so long as Medical Group and its Participating Providers have the
capacity to provide and arrange Covered Services under this Agreement
and for so long as Medical Group continues to accept new patients from
any HMO or other prepaid Health Plan. Medical Group shall provide at
least one hundred twenty (120) calendar days prior written notice to
Health Plan of any significant changes in the capacity of Medical
Group to provide or arrange Covered Services that would prevent
Medical Group from accepting additional Members. A significant change
in capacity includes, without limitation, the following: (i)
inability of Medical Group to properly serve additional Members due to
a lack of Primary Care Physicians or other Participating Providers;
(ii) inability of any one of Medical Group's Primary Care Physicians
or other Participating Providers to serve additional Members; or (iii)
closure of any office or facility used by Medical Group or its Primary
Care Physicians or other Participating Providers. Health Plan may
continue to enroll Members with Medical Group until the expiration of
the notice period required under this Section, and in such event,
Medical Group and its Primary Care Physicians and other Participating
Providers shall continue to accept such Members. Health Plan shall
discontinue the enrollment of Members with Medical Group upon
expiration of the notice period required under this Section until such
time, if any, that Medical Group provides written notification to
Health Plan that it has the capacity to accept additional Members.
2.3.6 NOTICE OF CHANGES IN NETWORK. In the event of a closure of a
Medical Group clinic, a termination of one or more Primary Care
Physicians or a change in a Medical Group clinic location, Health Plan
shall have the sole authority and
responsibility for providing notice of such changes to the
affected members. Members will be given a choice to stay with
Medical Group, stay with the same physician by moving to
another group or select a new group from the network.
2.4 MEDICAL GROUP'S SUBCONTRACTS WITH PARTICIPATING PROVIDERS. Medical Group
shall demonstrate and certify to Health Plan prior to the Commencement
Date and upon Health Plan's written request at any time during the term
of this Agreement (in the format specified by Health Plan) that its
subcontracts with Participating Providers comply with requirements of
this Agreement. Medical Group shall amend any and all of its existing
subcontracts with Participating Providers which do not comply with this
Agreement within thirty (30) days following the execution of this
Agreement and shall provide Health Plan with written certification
thereof.
2.4.1 COMPLIANCE WITH PROVISIONS OF AGREEMENT. Medical Group's
subcontracts with Participating Providers shall be in writing. All
such subcontracts shall be consistent with the terms and conditions of
this Agreement (including the Product Attachments) and shall meet
Health Plan's requirements for Participating Provider subcontracts as
set forth in the Provider Manual. If this Agreement is amended or
modified, all such subcontracts shall be amended or modified within
thirty (30) calendar days to be consistent with such amendments or
modifications.
2.4.2 COMPLIANCE WITH STANDARDS OF ACCREDITATION ORGANIZATIONS AND
REQUIREMENTS OF STATE AND FEDERAL LAW. Medical Group's subcontracts
with Participating Providers shall comply with the standards of
Accreditation Organizations and requirements of State and Federal Law.
If there are changes in such standards and/or requirements, Medical
Group shall amend its subcontracts with Participating Providers to
comply with such changes within thirty (30) calendar days following
notice thereof from Health Plan.
2.4.3 ACCESS BY HEALTH PLAN, ACCREDITATION ORGANIZATIONS AND
GOVERNMENT AGENCIES. Medical Group and its Participating Providers
shall be required to make available at all reasonable times for
inspection, examination and copying by Health Plan, Accreditation
Organizations and Government Agencies copies of all Participating
Provider subcontracts, and all books and records pertaining to Covered
Services provided to Members under this Agreement. Medical Group and
its Participating Providers shall retain such books and records for a
term of at least five (5) years from the close of the fiscal year in
which the Covered Services were provided.
2.4.4 MEDICAL GROUP'S RESPONSIBILITY FOR PROVIDING OR ARRANGING
COVERED SERVICES. Notwithstanding the existence of Medical Group's
subcontracts with its Participating Providers, Medical Group shall
remain responsible for satisfying the obligations of Medical Group set
forth in this Agreement. If any of Medical Group's subcontracts with
Participating Providers are terminated, Medical Group shall remain
responsible for providing or arranging Covered Services through its
remaining Participating Providers and shall remain financially
responsible for Medical Group Services provided to Medical Group
Members under this Agreement.
2.4.5 DISCLOSURE OF TERMS. Nothing in this Agreement shall be deemed
to require Medical Group to disclose the financial terms of its
subcontracts with Participating Providers, unless such disclosure is
required by State or Federal Law or unless Health Plan is responsible
for paying or administering claims under the terms of such
subcontracts.
2.5 ACCEPTANCE AND TRANSFER OF MEMBERS. Medical Group and its Participating
Providers may not impose any limitations on the acceptance of Members
for care or treatment that are not imposed on other patients. Health
Plan, Medical Group and its Participating Providers shall not request,
demand, require or seek directly or indirectly the transfer, discharge
or removal of any Member for reasons of Member's need for, or
utilization of, Covered Services, except in accordance with the
procedures established by Health Plan for such action. Medical Group
and its Participating Providers shall not refuse or fail to provide or
arrange Covered Services to any Member.
Health Plan and Medical Group shall exercise reasonable efforts in
following the procedures for transfer, discharge or removal of Members
as set forth in the Provider Manual. Nevertheless, Health Plan may
require transfer of Members for any reason, and Medical Group may
request that Health Plan transfer Medical Group Members to another of
Health Plan's Participating Providers if Medical Group is unable to
provide the Covered Services required by this Agreement for reasons
related to capacity of Medical Group and its Participating Providers.
In addition, Medical Group may request that Health Plan transfer a
Medical Group Member to another of Health Plan's Participating
Providers in the event of a material breakdown in the
physician-patient relationship. Health Plan shall evaluate such
requests considering the best interests of the Member. In the event
Health Plan grants a request for transfer of a Member by Medical
Group, the transfer shall not be effective until the end of the month
following the month in which the Member receives notice of transfer,
unless the Member agrees to an earlier transfer and Health Plan has
made arrangements with another of Health Plan's Participating
Providers to accept the Member.
2.6 MEDICAL RECORDS. Medical Group and its Participating Providers shall
maintain all patient medical records relating to Covered Services
provided to Members, in such form and containing such information as
required by the QI Program, Accreditation Organizations and State and
Federal Law. Medical records shall be maintained in a manner that is
current, detailed, organized and permits effective patient care and
quality review by Medical Group and Health Plan pursuant to the QI
Program. Medical records shall be maintained in a form and physical
location which is accessible to Medical Group's Participating Providers,
Health Plan, Government Agencies and Accreditation Organizations. Upon
request, Medical Group and its Participating Providers shall provide to
Health Plan, at Medical Group's expense, copies of Member
medical records for purposes of conducting quality assurance, case
management and utilization reviews, credentialing and peer review, claims
processing, verification and payment, resolving Member grievances and
appeals and other activities reasonably necessary for the proper
administration of the Managed Care Plans consistent with State and
Federal Law. Medical Group and its Participating Providers shall
maintain the confidentiality of all Member medical records and treatment
information in accordance with State and Federal Law. Medical records
shall be retained by Medical Group and its Participating Providers for at
least five (5) years following the provision of Covered Services. The
provisions of this Section shall survive termination of this Agreement
for the period of time required by State and Federal Law.
2.7 INSURANCE. Medical Group, at its sole cost and expense, shall maintain
throughout the term of this Agreement and for a period of four years
following termination of this Agreement, professional liability insurance
(i.e., medical malpractice insurance) and managed care errors and
omissions insurance in the minimum amount of $1,000,000 per occurrence
and $3,000,000 annual aggregate, the annual aggregate to apply separately
for each physician and health care practitioner who is insured under the
policy (or policies) purchased by Medical Group. If the policy (or
policies) is canceled or not renewed and coverage is provided on a
claims-made basis, Medical Group 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, that
Medical Group need not exercise such option if the superseding insurer
will accept all prior claims.
Medical Group, at its sole cost and expense, shall also maintain
throughout the term of this Agreement, workers' compensation insurance
as required by the State of California and general liability
insurance, including but not limited to premises, personal injury and
contractual liability insurance, in a minimum amount of $1,000,000 per
occurrence, combined single limit, bodily injury and property damage,
to insure Medical Group and its employees, agents, and representatives
against claims for damages arising by reason of (i) personal injuries
or death occasioned in connection with the performance of any Covered
Services provided under this Agreement, (ii) the use of any property
and facilities of the Medical Group, and (iii) activities performed in
connection with this Agreement.
Medical Group's Participating Providers who are not insured under the
Medical Group's policy (or policies) shall maintain the same insurance
coverage required of Medical Group under this Section, unless
otherwise specified in the Provider Manual.
All insurance required under this Agreement shall be provided by
insurers who meet Health Plan's standards as set forth in the Provider
Manual. A certificate of insurance shall be issued to Health Plan
prior to the Commencement Date and upon the renewal of the insurance
coverage specified in this Section. The certificate shall provide
that Health Plan shall receive thirty (30) days prior written notice
of cancellation or material reduction in the insurance coverage
specified in this Section. Notwithstanding any other provision of
this Agreement,
failure to provide the certificate of insurance shall be grounds for
immediate termination of this Agreement.
2.8 FINANCIAL STATEMENTS. Medical Group shall provide to Health Plan within
forty five (45) calendar days of the end of each calendar quarter copies
of its quarterly financial statements, which shall include a balance
sheet, statement of income and statement of cash flow (the "Financial
Statements") prepared in accordance with generally-accepted accounting
principles. Such quarterly Financial Statements shall be certified by
the chief financial officer of Medical Group as accurately reflecting the
financial condition of Medical Group for the period indicated. In
addition, Medical Group shall provide to Health Plan, within forty five
(45) calendar days of the end of each fiscal year, copies of its audited
annual Financial Statements.
2.9 ADMINISTRATIVE REQUIREMENTS.
2.9.1 ADMINISTRATIVE GUIDELINES. Medical Group agrees to perform its
duties under this Agreement in accordance with the administrative
guidelines, policies and procedures set forth in the Provider Manual
and State and Federal Law. Medical Group shall be responsible for
distributing copies of the Provider Manual, as necessary, to its
Participating Providers.
2.9.2 MEDICAL DIRECTOR, HEALTH PLAN COORDINATOR, QUALITY IMPROVEMENT
COMMITTEE AND UTILIZATION MANAGEMENT COMMITTEE. Medical Group shall
designate one of its Participating Providers who is a physician or
osteopath to act as Medical Group's Medical Director and shall
designate an individual to act as the Health Plan coordinator with
Health Plan. The duties of Medical Group's Medical Director and
Health Plan coordinator shall be set forth in the Provider Manual. In
addition, Medical Group shall establish and maintain a quality
improvement committee and a utilization management committee to assist
Health Plan in implementing the QI Program and UM Program with respect
to Medical Group Members.
2.9.3 PARTICIPATION IN HEALTH PLAN ORIENTATION AND TRAINING PROGRAMS.
Medical Group shall require its administrative personnel and its
Participating Providers to participate in Health Plan's orientation
and training programs as described in the Provider Manual.
2.9.4 ENCOUNTER DATA. Medical Group shall maintain and provide to
Health Plan, no later than the fifteenth (15th) day of each month, the
utilization data pertaining to Covered Services provided or arranged
by Medical Group and its Participating Providers for Medical Group
Members during the preceding month as described in the Provider Manual
(the "Encounter Data"). Medical Group shall submit Encounter Data in
accordance with the procedures and standards set forth in the Provider
Manual.
2.9.5 OTHER DATA AND INFORMATION. Medical Group shall maintain and
provide to Health Plan, upon written request, any and all information
required by Health Plan, State and Federal Law, Government Agencies or
Accreditation Organizations for the administration of Managed Care
Plans. Medical Group shall submit such information and data to Health
Plan in the format and within the time periods specified by Health
Plan.
2.10 MEDICAL GROUP'S FAILURE TO COMPLY WITH AGREEMENT, PROVIDER MANUAL OR
MANAGED CARE PLANS. If Medical Group fails to comply with any
provision(s) of this Agreement, the Provider Manual or the Managed Care
Plans, Health Plan may provide written notice of such failure to Medical
Group, specifying a date at least thirty (30) days following the date of
the notice by which Medical Group must be in compliance with such
provision(s), as reasonably determined by Health Plan. If Medical Group
fails to comply with such provision(s) by the date specified in the
notice, Health Plan shall have the right to cease marketing efforts on
behalf of Medical Group and/or discontinue enrollment of Members with
Medical Group until such time as Medical Group complies with such
provision(s), as reasonably determined by Health Plan. In addition,
Health Plan shall have the right to either (i) collect from Medical Group
or (ii) offset against amounts due Medical Group under this Agreement,
any penalties or other monetary amounts payable by Health Plan to
Government Agencies, Subscriber Groups, Participating Providers or any
other health care providers as a result of Medical Group's failure to
comply with any provision(s) of this Agreement, the Provider Manual or
Managed Care Plans. Health Plan's rights and remedies under this Section
shall be in addition to all other rights and remedies available to Health
Plan to enforce this Agreement, including the right of termination.
2.11 RECIPROCITY AGREEMENTS. Medical Group shall cooperate and develop
arrangements with Health Plan's Participating Providers and other Health
Plan-affiliated entities ("Health Plan Affiliates") to assure reciprocity
of health care services for Members who are not Medical Group Members.
2.11.1 SERVICES PROVIDED BY MEDICAL GROUP. Medical Group shall
provide Covered Services to Members who are not Medical Group Members,
including Members assigned to other Health Plan Participating
Providers, and Members enrolled in the managed care and health benefit
plans of Health Plan Affiliates. Payment for such services shall be at
the Cost of Care. Such services shall include Emergency Services,
Urgently Needed Services and Covered Services provided upon referral
from Health Plan's Participating Providers or Health Plan Affiliates.
2.11.2 SERVICES PROVIDED BY HEALTH PLAN PARTICIPATING PROVIDERS.
Health Plan shall, where contractually available, provide reciprocity
to Medical Group at Health Plan rates for Covered Services provided to
Medical Group Members. Health Plan shall adjudicate and pay such
referred claims on behalf of Medical Group (at
available reciprocity rates or, if reciprocity rates are unavailable,
at rates negotiated in consultation with Medical Group), shall deduct
the costs of such claims from Medical Group's monthly Capitation
Payments and shall provide Medical Group an accounting thereof. If
both Medical Group and Health Plan have agreements with Participating
Providers, Medical Group's agreements shall be utilized for the
provision of Covered Services under this Agreement and the rates set
forth in Medical Group's agreements shall apply.
2.12 HOSPITAL ADMISSIONS. In recognition of the need for coordination,
continuity and quality of care of Covered Services provided to Medical
Group Members and to ensure continuity and quality of care, Medical Group
agrees to utilize Hospital(s) as the provider of Hospital Services for
Medical Group Members, subject to the following exceptions:
(i) Medical Group Members admitted for Emergency Services or Urgently
Needed Services; and
(ii) Medical Group Members requiring Hospital Services not available at
Hospital.; and
(iii) Medical Group Members directed to any other Health Plan
Participating Provider in accordance with Health Plan's
Utilization Management Program.
Notwithstanding the foregoing, Medical Group Member requests for
treatment at another Health Plan Participating Provider may be granted
due to limited Hospital(s) bed capacity or if such request is in the
Member's best interest, as determined by Health Plan.
2.13 ADDITION OF NEW CLINICS. Medical Group agrees that Health Plan, in its
sole discretion, may add into this Agreement, under the terms and
conditions of this Agreement and within a reasonable time as established
mutually by Health Plan and Medical Group, any future medical group
practices the Medical Group acquires or new site locations the Medical
Group establishes, but any final agreement shall be subject to the
occurrence of the following conditions:
2.13.1 Health Plan has executed contracts with hospital and ancillary
service providers which collectively constitute a service delivery
system;
2.13.2 Health Plan has not elected to delay or abandon the completion
of Managed Care Plans or networks that would provide additional
Members to be covered by this Agreement;
2.13.3 Health Plan has received approval from the appropriate local,
state and federal governmental or quasi-governmental agencies, which
have regulatory or quasi- regulatory powers over Health Plan or its
programs, including, but are not limited to, HCFA and the relevant
state agencies;
2.13.4 The new Medical Group facility or location has obtained any and
all applicable licenses and permits and is approved by Health Plan
pursuant to Health Plan's credentialing program.
2.14 PARTICIPATION IN HEALTH PLAN PROGRAMS. Medical Group agrees to
participate in any and all Managed Care Plans, provided Health Plan has
requested Medical Group's participation. The addition of new Managed Care
Plans shall be subject to Section 7.9.1.
ARTICLE 3
ADMINISTRATIVE DUTIES OF HEALTH PLAN
3.1 ADMINISTRATION AND PROVISION OF DATA. Health Plan shall perform
administrative, accounting, enrollment, eligibility verification and
other functions necessary for the administration and operation of the
Managed Care Plans. Health Plan shall provide Medical Group with
management information and data reasonably necessary to carry out the
terms and conditions of this Agreement and for the operation of the
Managed Care Plans.
3.2 MARKETING. Health Plan shall make reasonable efforts to market the
Managed Care Plans. Medical Group agrees that Health Plan may, in its
discretion, use Medical Group's name, address and telephone number as
well as the names, addresses and telephone numbers and specialties of its
Participating Providers in Health Plan's marketing and informational
materials including, without limitation, Health Plan's directory of
Participating Providers. Nothing in this Agreement shall be deemed to
require Health Plan to conduct any specific marketing activities on
behalf of Medical Group and its Participating Providers or to identify
Medical Group or its Participating Providers in any specific Health Plan
marketing or informational materials.
3.3 ENROLLMENT AND ASSIGNMENT OF MEMBERS. Health Plan shall be responsible
for distributing the Health Plan Enrollment Packet to all Members upon
enrollment and at open enrollment periods. Health Plan shall provide
benefit information to Members concerning the type, scope and duration of
benefits to which Members are entitled under the Managed Care Plans.
Nothing in this Agreement shall be construed to require Health Plan to
assign any minimum or maximum number of Members to Medical Group or to
utilize Medical Group for any Members in the Medical Group Risk Area.
3.4 ELIGIBILITY INFORMATION. Health Plan shall provide the Eligibility List
to Medical Group on the fifteenth (15th) day of each month.
3.5 BENEFIT DESIGN AND INTERPRETATION; COVERAGE DECISIONS. Health Plan shall
be solely responsible for the benefit design of all Managed Care Plans,
including establishing
benefits, Premiums and Copayments. Health Plan shall be solely
responsible for interpreting the terms of and making final coverage
determinations under the Managed Care Plans.
3.6 CASE MANAGEMENT. Health Plan shall manage and coordinate Covered
Services for Members with complex medical conditions to ensure that care
is provided in a manner which encourages quality, continuity of care and
cost-effectiveness ("Case Management"). Medical Group shall cooperate
fully with Health Plan in providing information that may be required in
determining the need for Case Management and in the transfer of Members
to designated Health Plan Participating Providers for cost effective
care.
3.7 OUT-OF-AREA MEDICAL SERVICES. Health Plan shall manage and coordinate
Out-of-Area Medical Services. Medical Group shall cooperate fully with
Health Plan in providing information that may be required for
transferring Members back into the Medical Group Risk Area, including
promptly notifying Health Plan of known or suspected Out-of-Area Medical
Services, and shall accept the prompt transfer of Members to the care of
Medical Group and its Participating Providers following the receipt of
Out-of-Area Medical Services.
ARTICLE 4
MANAGED CARE PROGRAM SERVICES
4.1 MANAGED CARE PROGRAM SERVICES. Health Plan shall be accountable for the
performance of the following services for all Managed Care Plans: (I)
quality management and improvement, (ii) utilization management, (iii)
credentialing, (iv) member rights and responsibilities, (v) preventive
health services, (vi) medical record review and (vii) payment and
processing of claims (collectively, "Managed Care Program Services").
Medical Group and its Participating Providers shall participate,
cooperate and comply with Health Plan in the performance of all Managed
Care Program Services. Specific activities related to utilization
management, credentialing and claims processing may be delegated by
Health Plan to Medical Group at such time as Medical Group demonstrates
to Health Plan's satisfaction the ability to perform these functions in
compliance with Health Plan's standards, as amended from time to time.
Before the performance of any activities is delegated to Medical Group,
Health Plan shall conduct a comprehensive audit of Medical Group's
ability and administrative capacity to perform such activities. Medical
Group shall provide all documentation requested by Health Plan and shall
provide Health Plan representatives with on-site access to Medical
Group's facilities and personnel for purposes of conducting such audit.
4.1.1 QUALITY MANAGEMENT AND IMPROVEMENT. Health Plan shall maintain
an ongoing Quality Management and Improvement Program ("QI Program") to
assess and improve
the quality of clinical care and the quality of service provided to
Members under the Managed Care Plans. The QI Program shall be
maintained in accordance with the requirements of State and Federal
Law and the standards of Accreditation Organizations. Medical Group
and its Participating Providers shall participate, cooperate and
comply with the QI Program.
Medical Group shall, at the written request of Health Plan, make
available its Participating Providers who are physicians to serve on
Health Plan's QI Committee. Medical Group shall establish and maintain
an independent quality improvement committee which shall meet as
frequently as necessary, but at least monthly. A member of the Health
Plan medical services staff may participate in Medical Group's quality
improvement committee meetings. Medical Group shall keep minutes of its
quality improvement committee meetings, a copy of which shall be made
available to Health Plan upon ten (10) days written notice by Health Plan
to Medical Group. If the functions of the quality improvement committee
are performed by the Medical Group's utilization review committee, each
committee must hold separately convened meetings and the minutes of each
meeting must be separately maintained.
Medical Group shall develop written procedures for focused review or
remedial action whenever it is determined by Health Plan's QI Committee
that inappropriate or substandard Covered Services have been furnished or
Covered Services that should have been furnished have not been furnished.
Upon request, Health Plan shall assist Medical Group in the formulation
of such focused review and remedial procedures.
4.1.2 UTILIZATION MANAGEMENT. Health Plan shall maintain an ongoing
Utilization Management Program ("UM Program") to address
pre-authorization, concurrent and retrospective review of the quality,
appropriateness, level of care and utilization of all Covered Services
provided or to be provided to Members under the Managed Care Plans.
The UM Program shall be maintained in accordance with the requirements
of State and Federal Law and the standards of Accreditation
Organizations. Medical Group and its Participating Providers shall
participate, cooperate and comply with the UM Program.
Medical Group shall establish and maintain a utilization review committee
which shall meet as frequently as necessary, but at least weekly. A
member of the Health Plan medical services staff may participate in
Medical Group's utilization review committee meetings. Medical Group
shall keep minutes of its utilization review committee meetings, a copy
of which shall be made available to Health Plan upon ten (10) days
written notice by Health Plan to Medical Group. Medical Group's
utilization review committee shall review elective referrals and hospital
and skilled nursing facility admissions on a prospective basis, and
Emergency Services and Urgently Needed Services requiring hospital
admissions on a retrospective basis. The committee shall also be
responsible for monitoring patterns of care, isolating inappropriate
utilization and performing other management and review duties as
specified in the UM Program.
4.1.3 CREDENTIALING. Health Plan shall maintain standards, policies
and procedures for credentialing and recredentialing physicians,
hospitals and other health care professionals and facilities that
provide Covered Services to Members under the Managed Care Plans
("Credentialing Program"). The Credentialing Program shall be
maintained in accordance with the requirements of State and Federal
Law and the standards of Accreditation Organizations. Medical Group
and its Participating Providers shall participate, cooperate and
comply with Health Plan's Credentialing Program.
4.1.4 MEMBER RIGHTS AND RESPONSIBILITIES. Health Plan shall inform
Members of their rights and responsibilities under each Managed Care
Plan, provide Members with membership cards and member handbooks,
distribute periodic communications to Members, process Member
complaints and grievances and respond to inquiries and requests from
Members regarding Managed Care Plans (collectively "Member Services").
Medical Group and its Participating Providers shall participate,
cooperate and comply with Health Plan's Member Services activities.
4.1.5 PREVENTIVE HEALTH SERVICES. Health Plan shall develop
preventive health guidelines for the prevention and early detection of
illness and disease ("Preventive Health Guidelines') and shall
encourage Members to use preventive health services. The Preventive
Health Guidelines shall be maintained in accordance with the standards
of Accreditation Organizations and shall be distributed to
Participating Providers. Medical Group and its Participating Providers
shall provide preventive health services to Medical Group Members in
accordance with the Preventive Health Guidelines.
4.1.6 MEDICAL RECORD REVIEW. Health Plan shall on an ongoing basis
review medical records maintained by Medical Group and its
Participating Providers to assess compliance with the requirements of
State and Federal Law and the standards of Accreditation
Organizations. Medical Group and its Participating Providers shall
maintain medical records in accordance with the provisions of this
Agreement regarding medical records and in accordance with guidelines
regarding medical records set forth in the Provider Manual.
4.1.7 CLAIMS PROCESSING. Health Plan shall establish and maintain
standards, policies and procedures for the timely and accurate
processing and payment of claims for Covered Services provided to
Members ("Claims Processing Guidelines"). The Claims Processing
Guidelines shall be maintained in accordance with the requirements of
State and Federal Law and the Managed Care Plans. Medical Group and
its Participating Providers shall comply with Health Plan's Claims
Processing Guidelines.
4.2 PERFORMANCE OF DELEGATED ACTIVITIES. Health Plan may delegate to Medical
Group, and
Medical Group shall perform, those activities which are specified in
EXHIBIT 3 to the Base Agreement relating to the following Managed Care
Program Services at such time as Medical Group demonstrates to Health
Plan's satisfaction the ability to perform these functions in compliance
with Health Plan's standards, as amended from time to time: (i)
Utilization Management; (ii) Credentialing; and (iii) Claims Processing
(collectively, the "Delegated Activities").
4.2.1 HEALTH PLAN POLICIES. For all Delegated Activities, Health
Plan shall provide Medical Group with Health Plan's standards and
requirements applicable to the Delegated Activities, as amended from
time to time (the "Health Plan Policies") and shall notify Medical
Group of all substantive changes to the Health Plan Policies. Medical
Group may utilize its own policies and procedures for the Delegated
Activities, provided that such policies and procedures are consistent
with the Health Plan Policies. If Medical Group's policies and
procedures are inconsistent with the Health Plan Policies, the Health
Plan Policies shall apply.
4.2.2 SUB-DELEGATION. Medical Group shall not further delegate the
performance of Delegated Activities to any of its Participating
Providers or any other organization or entity without the prior
written consent of Health Plan. Medical Group acknowledges and agrees
that Health Plan is accountable for all Delegated Activities, and
therefore, Medical Group and its Participating Providers agree to
participate, cooperate and comply with Health Plan with respect to all
Delegated Activities.
4.2.3 MAINTENANCE OF INFORMATION AND RECORDS. Medical Group shall
maintain all information and records reviewed or created in connection
with performing the Delegated Activities in a form acceptable to
Health Plan, provide Health Plan with access to such information and
records, and permit Health Plan to review and copy such information
and records, in accordance with the requirements of State and Federal
Law and standards of Accreditation Organizations.
4.2.4 REPORTING OBLIGATIONS. Medical Group shall provide Health Plan
with periodic written reports regarding all Delegated Activities in
the formats specified by Health Plan for each of the Delegated
Activities.
4.2.5 MONITORING/AUDITS. Health Plan shall oversee Medical Group's
performance of Delegated Activities through review of periodic written
reports provided by Medical Group as described above and meetings with
appropriate Medical Group representatives and on-site audits and
assessments of Medical Group. Medical Group shall cooperate,
participate and comply with Health Plan in such monitoring and
oversight activities. Such audits and assessments will be performed
in accordance with the requirements of State and Federal Law and the
standards of Accreditation Organizations. Without limiting the
foregoing, Medical Group agrees that arrangements with its
Participating Providers will permit Medical Group to disclose to
Health Plan its Participating Provider
credentialing files.
4.3 PAYMENT FOR PERFORMANCE OF DELEGATED ACTIVITIES. Payment for performance
of the Delegated Activities by Medical Group is included in Capitation
Payments made to Medical Group under this Agreement. The following
percentages of Capitation Payments have been allocated to the performance
of Delegated Activities and are included in the Capitation Payments:
DELEGATED ACTIVITY PERCENTAGE OF CAPITATION PAYMENTS
Utilization Management 2.0%
Credentialing 0.5%
Claims Processing 2.0%
For each month in which the performance of any Delegated Activity is revoked by
Health Plan as provided in this Article 4, the Capitation Payments to Medical
Group shall be reduced by the percentage specified above for such Delegated
Activity. However, for a period of twelve (12) months following the Commencement
Date (the "Grace Period"), Health Plan will provide Claims Processing on behalf
of Medical Group with no reduction in Medical Group's Capitation Payment.
Following expiration of the Grace Period, Health Plan shall deduct the amounts
specified above from the Medical Group's Capitation Payment rate unless and
until Medical Group has assumed responsibility for such services. Health Plan
may modify the payment for Delegated Activities effective at the beginning of
any calendar year by providing Medical Group with sixty (60) calendar days prior
written notice.
4.4 REVOCATION OF DELEGATED ACTIVITIES. Health Plan may revoke any or all
Delegated Activities if Health Plan determines that they are not being
performed in accordance with the standards and requirements established
by Health Plan or if Medical Group's performance of Delegated Activities
is inconsistent with, or in violation of, State and Federal Law or
threatens Health Plan's accreditation by any Accreditation Organization.
Health Plan shall provide Medical Group with thirty (30) calendar days
prior written notice specifying the Delegated Activities which Health
Plan intends to revoke, unless Health Plan determines that Medical
Group's continued performance of Delegated Activities presents a risk of
harm to Health Plan Members, in which case the Delegated Activities shall
be revoked immediately. If Medical Group does not conform to the
applicable standards and requirements within such thirty (30) calendar
day notice period, Health Plan shall send a second written notice to
Medical Group confirming the revocation of the Delegated Activities, the
effective date of such revocation and the period of time such revocation
shall remain in effect. During this period, Medical Group will take
corrective action to conform with applicable standards and requirements
established by Health Plan. At the end of such period, Health Plan shall
evaluate Medical Group's corrective action, determine whether Medical
Group is able to resume performance of the Delegated Activities, and
provide written notice to Medical Group of such determination.
The written notices from Health Plan to Medical Group under this
Section shall specify the adjustments to Capitation Payments as a
result of the revocation of any Delegated Activities in accordance
with the allocations set forth in this Article 4. If only a portion
of a specific Delegated Activity is revoked (e.g., Medical Group
continues to perform some, but not all, of a specific Delegated
Activity), Health Plan shall have the right to adjust the allocations
set forth in this Article 4 to reflect the portion of the specific
Delegated Activity which continues to be performed by Medical Group.
Notwithstanding any other provision of the Agreement, the written
notices from Health Plan to Medical Group under this Section shall be
deemed valid and enforceable modifications to the Agreement, whether
or not signed by Medical Group.
Upon revocation of any of the Delegated Activities, Health Plan will
resume responsibility for performing such activities, and Medical
Group and its Participating Providers shall continue to cooperate,
participate and comply with Health Plan with respect to the
performance of such activities.
ARTICLE 5
COMPENSATION
5.1 CAPITATION PAYMENTS. Health Plan shall make monthly Capitation Payments
to Medical Group as payment for providing and arranging Covered Services
to Medical Group Members for each Managed Care Plan, as specified in this
Agreement and in the applicable Product Attachment.
5.1.1 DUE DATE. Except as provided in Exhibit B to Product Attachment
B1 hereof, each Capitation Payment shall be due and payable on the
fifteenth (15th) day of the month for the current month's Covered
Services.
5.1.2 DOCUMENTATION. Health Plan shall provide Medical Group
appropriate documentation in support of each Capitation Payment.
5.1.3 RETROACTIVE ADJUSTMENTS. Capitation Payments shall be subject
to retroactive adjustments either upward or downward due to
retroactive changes in the Premium for each Managed Care Plan as
specified in the applicable Product Attachment and retroactive changes
in the number of Medical Group Members for each Managed Care Plan.
Retroactive adjustments shall be made within thirty (30) days after
the adjustment is determined.
5.2 ADJUSTMENT FOR CLAIMS PROCESSING; DEPOSIT. Health Plan shall deduct from
Medical Group's monthly Capitation Payment an amount reasonably estimated
by Health Plan to be necessary for Health Plan to process and pay claims
for Medical Group Services which are not provided directly by Medical
Group and its employed Participating Providers (the "Claims Processing
Withhold"). Initially, the Claims Processing
Withhold shall be equal to the current average claims cost for outside
providers as of the Commencement Date. The Claims Processing Withhold
shall be increased or decreased each month to more accurately reflect
Medical Group's actual and expected claims experience. For any period in
which Medical Group has been delegated full responsibility for processing
claims for Medical Group Services which are not provided directly by
Medical Group and its employed Participating Physicians, the Claims
Processing Withhold will be zero.
5.3 ADJUSTMENT FOR OUT-OF-AREA MEDICAL SERVICES. Medical Group shall be
responsible for twenty percent (20%) of the actual costs incurred by
Health Plan in providing Out-of-Area Medical Services to Medical Group
Members. This amount shall be deducted from Medical Group's Capitation
Payment based on the actual costs incurred by Health Plan in paying
claims for Out-of-Area Medical Services during the previous month.
5.4 ADJUSTMENT FOR REVOCATION OF DELEGATED ACTIVITIES. Health Plan shall
deduct the amounts specified in Article 4, above, for any Delegated
Activity which is revoked by Health Plan in accordance with the
provisions of Article 4.
5.5 INCENTIVE PROGRAMS. Incentive programs are designed to ensure that
Health Plan, Medical Group and, for some programs, Hospital work
collaboratively to deliver Covered Services in an effective and efficient
manner by ensuring appropriate utilization of Covered Services. Incentive
programs for each Managed Care Plan are set forth in the applicable
Product Attachment.
5.5.1 INCENTIVE PROGRAM WITHHOLD. Health Plan shall establish a
single withhold from Medical Group's monthly Capitation Payment for
purposes of offsetting potential deficits for the combined incentive
programs, excluding the Split Capitation Commercial Hospital Incentive
Program and the Split Capitation Secure Horizons Hospital Incentive
Program for which separate withholds may be established. The monthly
incentive withhold shall initially be 0 percent (0%) of the Premium
for each Managed Care Plan, as described in the applicable Product
Attachment. Health Plan, in its sole discretion, shall prospectively
adjust the withhold based on Medical Group's experience under the
combined incentive programs at the time of the program settlements
described below. In no event shall the withhold exceed 0 percent (0%)
of the monthly Capitation Payment.
5.5.2 INCENTIVE PROGRAM SETTLEMENTS. Health Plan shall conduct
combined settlements for all of the incentive programs for Managed
Care Plans applicable to Medical Group, excluding the Split Capitation
Commercial Hospital Incentive Program and the Split Capitation Secure
Horizons Hospital Incentive Program, for which separate settlements
will be conducted. Surpluses and deficits under each of the incentive
programs shall be aggregated and offset against one another. Health
Plan will conduct an estimated calculation after six (6) months (the
"Interim Calculation") and a final calculation annually (the "Final
Calculation") based on the calendar
year. The incentive program withhold described above shall be refunded
to the Medical Group at the time of the incentive program settlements,
except that Medical Group's share of any incentive program deficits
shall be deducted from such refund. Except as otherwise provided in
the exhibits hereto, payments under the combined incentive programs
will be due from the owing party within one hundred and twenty (120)
days following the end of the six (6) months for the Interim
Calculation and within one hundred and eighty (180) days following the
end of the calendar year for the Final Calculation. Medical Group
shall have thirty (30) days from the date of written notice to audit
and submit any revisions to the incentive program settlement to Health
Plan. Any submitted revisions must be approved by Health Plan and such
approval shall not be unreasonably withheld. Health Plan shall then
have thirty (30) days to make any necessary adjustment to the
calculation and return the itemized calculation to Medical Group.
Such calculation shall be considered the final calculation unless
Medical Group and Health Plan agree to extend the calculation process.
Any amounts owing shall be paid to the appropriate party within
thirty (30) days of the release of the final itemized calculation. In
the event that claims for non-Participating Providers were incurred
during the calendar year in question but were not paid until after the
final calculation, such costs shall be carried forward and applied to
the subsequent calendar year's Hospital Incentive Program as an
expense for that calendar year. Only claims to non-contracted
providers will be carried forward. For the Interim Calculation, the
payment due will be limited to seventy five percent (75%) of the
calculated amount due to account for incurred but not received claims.
To the extent a Medical Group deficit has been carried forward from a
prior settlement period, this deficit shall be offset against amounts
due to Medical Group hereunder.
Prior to the Commencement Date, the terms of Product Attachment C
which relate to the timing of incentive payments due Medical Group
shall be amended to reflect the terms of the applicable hospital
agreement. Notwithstanding any language to the contrary in the
current Product Attachment C, Health Plan shall not offset incentive
payments among capitated hospital funds.
5.5.3 INCENTIVE PROGRAM COMPLIANCE WITH STATE AND FEDERAL LAW.
Health Plan and Medical Group acknowledge and agree that the payments
which may be made directly or indirectly under the incentive programs
described in this Agreement are not made as an inducement to reduce or
limit Covered Services to any specific Member. Medical Group
acknowledges and agrees that any payments which may be made directly
or indirectly under physician incentive programs Medical Group may
utilize with respect to its Participating Providers shall not be made
as an inducement to reduce or limit Covered Services to any specific
Member. Medical Group further acknowledges and agrees that the
incentive programs described in this Agreement shall be subject to
modification by Health Plan during the term of this Agreement in order
to comply with changes in State and Federal Law, and
Medical Group further agrees to modify any physician incentive
programs utilized with respect to its Participating Providers to
comply with such changes.
5.5.4 LIMITATION ON MEDICAL GROUP'S RISK. In the event Medical Group
incurs an obligation under the overall incentive program settlement
described above, Medical Group shall not be responsible for
reimbursing Health Plan nor shall Health Plan offset the Medical
Group's obligation against Medical Group's Capitation Payments due
under this Agreement. Health Plan shall carry forward any Medical
Group obligations as the result of an incentive program obligation and
the amount carried forward shall be offset against amounts otherwise
due to Medical Group under future settlements for the combined
incentive programs. Notwithstanding the foregoing, Medical Group
shall be responsible for reimbursing Health Plan for its portion of
any deficit under the Pharmacy Incentive Program.
5.6 STOP-LOSS AND REINSURANCE PROGRAMS
5.6.1 INDIVIDUAL STOP-LOSS. Medical Group shall comply with the
applicable individual stop loss provisions set forth in the Product
Attachments.
5.6.2 REINSURANCE PROGRAM. Where Hospitals are paid on a per diem
basis, Health Plan shall provide Reinsurance protection in order to
limit Medical Group's financial risk for Hospital Services under the
Professional Capitation Commercial Hospital Incentive Program and
Professional Capitation Secure Horizons Hospital Incentive Program
(the "Hospital Incentive Programs") to a specified dollar amount per
Medical Group Member per calendar year (the "Reinsurance Deductible"),
while encouraging Medical Group's continuing involvement with Medical
Group Member's care by sharing a portion of the financial
responsibility for Hospital Services which exceed the Reinsurance
Deductible ("Reinsurance Coinsurance"). The Reinsurance Deductible and
Reinsurance Coinsurance for Medical Group are specified in each
applicable Product Attachment. Notwithstanding any other provision of
this Agreement, Health Plan may amend the Reinsurance Deductible and
Reinsurance Coinsurance on an annual basis effective at the beginning
of any calendar year by providing sixty (60) calendar days prior
written notice to Medical Group. For Hospital Services which exceed
the Reinsurance Deductible, the Reinsurance Coinsurance shall be based
on actual amounts paid by Health Plan, subject to the Medical Group's
compliance with the procedures set forth in the Provider Manual and
the provisions of this Section set forth below.
5.6.3 SUBMISSION OF ISL AND REINSURANCE CLAIMS. Medical Group shall
submit all claims under the ISL Program and Reinsurance Program in
accordance with the procedures set forth in the Provider Manual.
Health Plan shall pay claims under the ISL Program and Reinsurance
Program only if such claims are submitted within one (1) year
following the date the claim is incurred.
5.6.4 NOTIFICATION OF CLAIMS. Medical Group shall provide written
notification to Health Plan when Medical Group Services or Hospital
Services for any Medical Group Member(s) equal fifty percent (50%) of
the ISL Deductible or fifty percent (50%) of the Reinsurance
Deductible, respectively. Such written notification shall be provided
to Health Plan no later than the fifteenth (15th) day of the month
following the month in which such threshold is reached. Medical Group
acknowledges and agrees that if Medical Group fails to provide the
written notice required by this Section within the time frame
specified in this Section, Medical Group shall be financially
responsible for ten percent (10%) of all Medical Group Services or ten
percent (10%) of all Hospital Services provided to the Medical Group
Member(s) in excess of the ISL Deductible or Reinsurance Deductible,
as applicable, which amount shall be in addition to the ISL
Coinsurance or Reinsurance Coinsurance, as applicable.
5.6.5 OPT-OUT FROM ISL AND/OR REINSURANCE PROGRAMS. Subject to
Health Plan's approval, Medical Group may elect to opt out of the ISL
Program or Reinsurance Program, effective upon the Commencement Date
or the beginning of any calendar year. In such event, Medical Group
shall be required to obtain stop-loss coverage from a third-party
insurance carrier acceptable to Health Plan and in the amounts
required by Health Plan and State and Federal Law. In order to
opt-out of Health Plan's ISL Program or Reinsurance Program, Medical
Group must provide written notice to Health Plan at least thirty (30)
days prior to the beginning of the calendar year. Such notice shall
specify the name of the third-party insurance carrier, and proposed
effective date, coverage levels and charges. If Health Plan does not
object to such coverage in writing within fifteen (15) days of the
date of the notice, Medical Group shall be required to purchase such
coverage as of the effective date specified in the notice.
5.7 PAYMENTS FOLLOWING TERMINATION OF AGREEMENT. Following termination of
this Agreement and continuing for each month in which the number of
Medical Group Members continues to be greater than or equal to two
hundred (200), Health Plan shall compensate Medical Group for providing
and arranging Covered Services to Medical Group Members under the same
terms and conditions which applied prior to termination of this
Agreement. For any month following termination of this Agreement in
which the number of Medical Group Members is less than two hundred (200),
Health Plan shall compensate Medical Group for providing Medical Group
Services to Medical Group Members at the Cost of Care.
5.8 COST OF CARE. Certain provisions of this Agreement require that Medical
Group provide health care services which are not covered by Capitation
Payments at Cost of Care and certain provisions of this Agreement require
that Medical Group Services be valued at
Cost of Care. For purposes of this Agreement, "Cost of Care" shall mean
the amount determined under Health Plan's fee schedule, attached as
EXHIBIT 1 to the Base Agreement for such services. Health Plan may
revise its fee-schedule from time to time by providing thirty (30) days
prior written notice to Medical Group; provided, however, that the fee
schedule utilized under this Agreement shall be no less favorable to
Medical Group than the fee schedule utilized by Health Plan for other
Participating Providers in the state.
5.9 COLLECTION OF COPAYMENTS. Medical Group and its Participating Providers
shall be responsible for the collection of Copayments upon rendering
Medical Group Services to Members in accordance with the applicable
Subscriber Agreement. Any Copayments which are stated as a percentage
shall be calculated using the Cost of Care for such Medical Group
Services.
5.10 COLLECTION OF CHARGES FROM THIRD PARTIES. Except as provided in Section
5.11, procedures for collection of charges from third parties shall be
governed by the terms of the Provider Manual.
5.11 COORDINATION OF BENEFITS. Medical Group shall cooperate with and
support, as mutually agreed upon by the parties, Health Plan's
coordination of benefits rights. Coordination of benefits procedures may
be further defined in the Provider Manual.
5.11.1 PLAN IS PRIMARY. If a Member possesses health benefits
coverage through another policy which is secondary to Health Plan
under applicable coordination of benefits rules, including the
Medicare secondary payor program, Medical Group shall accept payment
from Health Plan for Covered Services as provided herein as full
payment for such Covered Services, except for applicable Copayments.
Member shall have no obligation for any fees, regardless of whether
secondary insurance is available.
5.11.2 PLAN IS SECONDARY. If a Member possesses health benefits
coverage through another policy which is primary to Health Plan under
applicable coordination of benefits rules, including the Medicare
secondary payor program, or if Member is entitled to payment under a
workers' compensation policy or automobile insurance policy, Medical
Group may pursue payment from the primary payor or workers'
compensation carrier consistent with applicable law and regulations
and Medical Group's contract, if any, with the primary payor. In such
event, Health Plan's responsibility shall equal the amount of
out-of-pocket expenses (i.e., Copayments and deductibles) that Member
would incur in the absence of Health Plan's secondary coverage, minus
the ISL Deductible and ISL Coinsurance.
5.12 OFFSETTING. Except as may otherwise be specifically provided in this
Agreement, Health Plan shall have the right to offset any and all amounts
owed by Medical Group to Health Plan against amounts, including
Capitation Payments, owed by Health Plan to
Medical Group provided that Health Plan provides ninety (90) days prior
written notice of such amounts to Medical Group and Medical Group does
not pay such amounts within such ninety (90) day period. This right to
offset shall include, without limitation, Health Plan's right to offset
the following amounts owed to Health Plan by Medical Group: (I) amounts
owed by Medical Group under the incentive programs described in this
Agreement and in the Product Attachments, (ii) amounts owed by Medical
Group for Covered Services provided outside the Medical Group Risk Area,
and (iii) amounts owed by Medical Group due to overpayments or payments
made in error by Health Plan. Notwithstanding the foregoing, Health
Plan's right to offset shall not extend to Medical Group's risk sharing
arrangements with capitated hospitals.
5.13 ADEQUACY OF COMPENSATION. Medical Group agrees to accept payment as
provided herein as payment in full for providing and arranging the
Covered Services required under this Agreement, whether that amount is
paid in whole or in part by Member, Health Plan or any Subscriber,
including other health care plans that pay before Health Plan as required
by applicable state or federal coordination of benefits provisions. This
Section does not prohibit Medical Group from collecting applicable
Copayments or deductibles consistent with the Managed Care Plans.
5.14 SERVICES RENDERED TO INELIGIBLE SUBSCRIBERS - Health Plan agrees to
reimburse Medical Group for Covered Services provided to an ineligible
Member if the Member was listed as eligible on the most current
eligibility list provided to Medical Group by Health Plan. If Health
Plan is in receipt of billings to such ineligible Member from Medical
Group which demonstrate proof of having sent the Member or the Member's
legal guardian three (3) bills no less than thirty (30) days apart,
Health Plan will reimburse Medical Group for services provided which
would have been Covered Services if the Member had been eligible.
Reimbursement shall be at Cost of Care, minus any amounts collected by
Medical Group from other sources. If subsequent to payment by Health
Plan, Medical Group receives any payment from another source for the
services, then Medical Group shall reimburse Health Plan up to the amount
previously received from Health Plan so that Medical Group's full payment
does not exceed the Cost of Care.
5.15 RENEGOTIATION OF RATES AT THE END OF ONE YEAR. Either party may initiate
renegotiation of rates under this Agreement on the twelve (12) month
anniversary of the Commencement Date or, subsequently, at the expiration
of the Initial Term, by providing the other party prior written notice of
intent to renegotiate. Such notice of intent to renegotiate must be
provided at least ninety (90) days prior to the end of the twelve (12)
month anniversary of the Commencement Date or, for renegotiation at the
end of the Initial Term, ninety (90) days prior to the expiration of the
Initial Term. If proper notice is provided, the parties shall meet to
discuss rates in good faith and shall diligently pursue a prompt
resolution of the renegotiation. The rates under this Agreement shall
remain in effect unless and until the parties each agree through a
written amendment signed by both parties to revise the rates.
ARTICLE 6
TERM AND TERMINATION
6.1 TERM. The term of this Agreement shall be for thirteen (13) months
commencing on November 6 1996 (the "Commencement Date") and ending on
December 31, 1997. Thereafter, the term of this Agreement shall be
automatically extended for one (1) year on each January 1 ("Anniversary
Date"), unless either party provides the other with written notice of
such party's intention not to extend the term at least one hundred twenty
(120) calendar days prior to the Anniversary Date or until this Agreement
is appropriately terminated by either party as provided herein.
6.2 TERMINATION OF AGREEMENT WITH CAUSE. Either Health Plan or Medical Group
may terminate this Agreement for cause as set forth below, subject to the
notice requirement and cure period set forth below.
6.2.1 CAUSE FOR TERMINATION OF AGREEMENT BY MEDICAL GROUP. The
following shall constitute cause for termination of this Agreement by
Medical Group:
(i) NON-PAYMENT. Failure by Health Plan to pay Capitation Payments
due Medical Group hereunder within thirty (30) days of the
Capitation Payment due date or failure by Health Plan to make any
other payments due Medical Group hereunder within forty-five (45)
days of any such payment's due date.
(ii) BREACH OF MATERIAL TERM AND FAILURE TO CURE. Health Plan's
breach of any material term, covenant, or condition and
subsequent failure to cure such breach as provided below.
6.2.2 CAUSE FOR TERMINATION OF AGREEMENT BY HEALTH PLAN. The
following shall constitute cause for termination of this Agreement by
Health Plan:
(i) FINANCIAL FAILURE OF MEDICAL GROUP. Health Plan's reasonable
determination of Medical Group's anticipated inability to provide
or arrange for Covered Services as a result of the likelihood of
Medical Group's lack of financial resources, other than due to
Health Plan's non- payment of amounts due Medical Group
hereunder. Medical Group shall have the opportunity to dispute
such determination by Health Plan by providing reasonable
evidence and assurances of financial stability and capacity to
perform under this Agreement.
(ii) FAILURE TO PROVIDE QUALITY SERVICES. Medical Group's failure to
arrange or provide Covered Services in accordance with the
standards set forth in this Agreement and Health Plan's QI
Program and UM Program. Notwithstanding the foregoing, Health
Plan reserves the right to immediately withdraw from Medical
Group or any of its Participating Providers any or all Members in
the event the health or safety of Members is endangered by the
actions of Medical
Group or any of its Participating Providers or as a result of
continuation of this Agreement.
(iii) BREACH OF MATERIAL TERM AND FAILURE TO CURE. Medical
Group's breach of any material term, covenant or condition of
this Agreement and subsequent failure to cure such breach as
provided below.
6.2.3 NOTICE OF TERMINATION AND EFFECTIVE DATE OF TERMINATION. The
party asserting cause for termination of this Agreement (the
"terminating party") shall provide written notice of termination to
the other party. The notice of termination shall specify the breach
or deficiency underlying the cause for termination. The party
receiving the written notice of termination shall have thirty (30)
calendar days from the receipt of such notice to cure the breach or
deficiency to the satisfaction of the terminating party (the "Cure
Period"). If such party fails to cure the breach or deficiency to the
satisfaction of the terminating party within the Cure Period or if the
breach or deficiency is not curable, the terminating party shall
provide written notice of failure to cure the breach or deficiency to
the other party following expiration of the Cure Period. This
Agreement shall terminate upon receipt of the written notice of
failure to cure or at such other date as may be specified in such
notice. During the Cure Period, Health Plan may cease marketing
efforts for Medical Group and discontinue enrollment of Members with
Medical Group.
6.2.4 TERMINATION OF AGREEMENT UPON CONSOLIDATION OF HEALTH CARE
SERVICE PLAN LICENSES. Notwithstanding any other provision of this
Agreement, in the event that the health care service plan licenses of
Health Plan and FHP, Inc. are consolidated, Health Plan may, at its
option, terminate this Agreement at any time on or after the effective
date of such consolidation by providing Medical Group with sixty (60)
days prior written notice. In the event that Health Plan terminates
this Agreement under this Section, (i) all Medical Group Members who
are then covered under this Agreement shall be immediately covered
under the provisions of the Medical Services Agreement then in effect
between FHP, Inc. and Medical Group, and (ii) any and all settlements
under the incentive programs described in this Agreement which have
not been performed and remain outstanding shall be carried forward and
applied to the incentive programs described in the Medical Services
Agreement then in effect between FHP, Inc. and Medical Group.
6.3 AUTOMATIC TERMINATION UPON REVOCATION OF LICENSE OR CERTIFICATE. This
Agreement shall automatically terminate upon the revocation, suspension
or restriction of any license, certificate or other authority required
to be maintained by Medical Group or Health Plan in order to perform the
services required under this Agreement or upon the Medical Group's or
Health Plan's failure to obtain such license, certificate or authority.
6.4 TRANSFER OF MEDICAL RECORDS. Following termination of this Agreement, at
Health
Plan's request, Medical Group and its Participating Providers shall copy
all requested Member patient medical files in the possession of Medical
Group or its Participating Providers and forward such files to another
provider of Covered Services designated by Health Plan, provided such
copying and forwarding is not otherwise objected to by such Members. The
copies of such medical files may be in summary form. The cost of copying
the patient medical files shall be borne equally by Medical Group and
Health Plan. Medical Group shall cooperate with Health Plan in
maintaining the confidentiality of such Member medical records at all
times.
6.5 REPAYMENT UPON TERMINATION. Within one hundred eighty (180) calendar
days of the effective date of termination of this Agreement, an
accounting shall be made by Health Plan of the monies due and owing
either party and payment shall be forthcoming by the appropriate party to
settle such balance within thirty (30) calendar days of such accounting.
Either party may request an independent audit of such Health Plan
accounting by a mutually acceptable independent certified public
accountant and such audit shall be equally paid for by both parties. The
parties agree to abide by the findings of such independent audit.
Appropriate payment, if any, by the appropriate party shall be made
within thirty (30) calendar days of such independent audit.
6.6 TERMINATION NOT AN EXCLUSIVE REMEDY. Any termination by either party
pursuant to this Article is not meant as an exclusive remedy and such
terminating party may seek whatever action in law or equity as may be
necessary to enforce its rights under this Agreement.
6.7 PARTICIPATING PHYSICIAN SUBSTITUTION INTO AGREEMENT. Medical Group shall
require that its Participating Physicians who are independent contractors
("Independent Physicians") agree to be bound, at Health Plan's option, to
the terms and conditions of this Agreement in the event of dissolution or
insolvency of Medical Group or in the event of a termination of the
Agreement by Health Plan for cause. The Independent Physicians'
obligations shall continue through the last day of the initial term of
the Agreement (the "Physician Continuation Period"). In case of such
dissolution, insolvency or termination, Health Plan may, at its option,
assume the Medical Group's administrative responsibilities described in
the Agreement. The purpose of this provision is to ensure continuity of
care to Members. Payment to the Independent Physicians during the
Physician Continuation Period shall be at the Cost of Care rates.
ARTICLE 7
GENERAL PROVISIONS
7.1 INDEPENDENT CONTRACTOR RELATIONSHIP. The relationship between Health
Plan and Medical Group is an independent contractor relationship.
Neither Medical Group nor its Participating Providers, employees or
agents are employees or agents of Health Plan and neither Health Plan nor
its employees or agents are members, partners, employees
or agents of Medical Group. None of the provisions of this Agreement
shall be construed to create a relationship of agency, representation,
joint venture, ownership, control of employment between the parties other
than that of independent parties contracting solely for the purpose of
effectuating this Agreement. Nothing contained in this Agreement shall
cause either party to be liable or responsible for any debt, liability or
obligation of the other party or any third party unless such liability or
responsibility is expressly assumed by the party sought to be charged
therewith.
7.2 INDEMNIFICATION. Medical Group shall defend, indemnify and hold harmless,
and shall cause each of its Participating Providers to defend, indemnify
and hold harmless Health Plan and its directors, officers, employees,
affiliates and agents against any claim, loss, damage, cost, expense or
liability arising out of or related to the performance or nonperformance
by Medical Provider, its Participating Providers, employees or agents of
any Medical Group Services and other services to be performed or arranged
by Medical Group and its Participating Providers under this Agreement.
Health Plan shall defend, indemnify and hold harmless Medical Group
and its directors, officers, employees, affiliates and agents against
any claim, loss, damage, cost, expense or liability arising out of or
related to the performance or nonperformance by Health Plan, its
employees or agents of any services to be performed by Health Plan
under this Agreement.
7.3 PHYSICIAN-PATIENT RELATIONSHIP. Health Plan and Medical Group
acknowledge and agree that Medical Group or each of Medical Group's
Participating Providers shall maintain the physician-patient relationship
with each Member. Nothing contained in this Agreement is intended to
interfere with such physician-patient relationship. Nothing in this
Agreement shall be interpreted to discourage or prohibit Medical Group
and its Participating Providers from discussing treatment options or
providing other medical advice or treatment deemed appropriate by Medical
Group or its Participating Providers. Medical Group or its Participating
Providers shall have the sole responsibility for the medical care and
treatment of Members.
7.4 MEMBER APPEALS AND GRIEVANCES. Health Plan shall be responsible for
resolving Member claims for benefits under the Managed Care Plans and all
other claims against Health Plan. Health Plan shall resolve such claims
utilizing the Member Appeals and Grievance Procedures set forth in the
Subscriber Agreement and the Provider Manual. Medical Group shall assist
Health Plan in the handling of Member complaints, grievances and appeals,
consistent with the Member Appeals and Grievance Procedures. In the
event an oral or written complaint, grievance or appeal is presented to
Medical Group or any of its Participating Providers relating to benefits
or coverage under a Managed Care Plan and is not resolved within two (2)
calendar days, Medical Group or its Participating Provider will
immediately deliver such complaint, grievance or appeal to Health Plan
for handling pursuant to the Member Appeals and Grievance Procedures. At
the end of each month, Medical Group shall submit a report to Health Plan
of all Member complaints and grievances which were received and resolved
by Medical Group
and its Participating Providers within two (2) calendar days during the
previous month. The monthly report shall include the Member's name and
Health Plan identification number, date of complaint, nature of
complaint, and the resolution of complaint. Medical Group and its
Participating Providers shall comply with all final determinations made
by Health Plan through the Member Appeals and Grievance Procedures.
Member claims against Medical Group or its Participating Providers, other
than claims for benefits under the Managed Care Plans, are not subject to
the Member Appeals and Grievance Procedures and are not governed by this
Agreement.
7.5 DISPUTES BETWEEN MEDICAL GROUP OR ITS PARTICIPATING PROVIDERS AND MEMBER.
Any controversies or claims between Medical Group or its Participating
Providers and a Member arising out of the performance of this Agreement
by Medical Group or the Medical Group's Participating Provider, other
than claims for benefits under Managed Care Plans, are not governed by
this Agreement. Medical Group or its Participating Provider and the
Member may seek any appropriate legal action to resolve such controversy
or claim deemed necessary.
7.6 DISPUTES BETWEEN HEALTH PLAN AND MEDICAL GROUP
7.6.1 DISPUTE RESOLUTION PROCEDURE. Health Plan has established a
Provider Dispute Resolution Procedure, set forth in the Provider
Manual, to provide a mechanism by which Health Plan's Participating
Providers, including Medical Group and any of its Participating
Providers, may submit to Health Plan certain disputes arising out of
the performance of this Agreement or relating to the decisions made by
Health Plan under this Agreement for resolution on an informal basis.
Any dispute submitted pursuant to the Provider Dispute Resolution
Procedure should be addressed to the appropriate Health Plan person(s)
or department(s) at the address and/or telephone number identified in
the Provider Manual. Any provider dispute which is not resolved
informally through the Provider Dispute Resolution Procedure may be
submitted for arbitration as provided in Section 7.6.2 below.
7.6.2 ARBITRATION. Any controversy, dispute or claim arising out of
the interpretation, performance or breach of this Agreement which is
not resolved pursuant to the Provider Dispute Resolution Procedure
specified above shall be resolved by binding arbitration at the
request of either party, in accordance with the commercial rules of
the American Arbitration Association. Such arbitration shall occur in
Los Angeles, California, unless the parties mutually agree to have
such proceeding in some other locale. The arbitrators shall apply
California substantive law and federal substantive law where state law
is preempted. Civil discovery for use in such arbitration may be
conducted in accordance with the provisions of California law, and the
arbitrator selected shall have the power to enforce the rights,
remedies, duties, liabilities and obligations of discovery by the
imposition of the same terms, conditions and penalties as can be
imposed in like
circumstances in a civil action by a court of competent jurisdiction
of the State of California. The provisions of California law
concerning the right to discovery and the use of depositions in
arbitration are incorporated herein by reference and made applicable
to this Agreement.
The arbitrators shall have the power to grant all legal and equitable
remedies and award compensatory damages provided by California law,
except that punitive damages shall not be awarded. The arbitrators shall
prepare in writing and provide to the parties an award including factual
findings and the legal reasons on which the decision is based. The
arbitrators shall not have the power to commit errors of law or legal
reasoning, and the award may be vacated or corrected pursuant to the term
of California law for any such error.
Notwithstanding the above, in the event either Medical Group or Health
Plan wishes to obtain injunctive relief or a temporary restraining order,
such party may initiate an action for such relief in a court of law and
the decision of the court of law with respect to the injunctive relief or
temporary restraining order shall be subject to appeal only through the
courts of law. The courts of law shall not have the authority to review
or grant any request or demand for damages.
7.7 NOTICE. All notices required or permitted by this Agreement shall be in
writing and may be delivered in person or may be sent by registered or
certified mail or U.S. Postal Service Express Mail, with postage prepaid,
or by Federal Express or other overnight courier that guarantees next day
delivery, or by facsimile transmission, and shall be deemed sufficiently
given if served in the manner specified in this Section. The addresses
set forth on the signature page shall be the particular party's address
for delivery or mailing of notice purposes.
The parties may change the names and addresses through written notice
in compliance with this Section. Any notice sent by registered or
certified mail, return receipt requested, shall be deemed given on the
date of delivery shown on the receipt card, or if no delivery date is
shown, the postmark date. Notices delivered by U.S. Postal Service
Express mail, Federal Express or overnight courier that guarantees
next day delivery shall be deemed given twenty-four (24) hours after
delivery of the notice to the United States Postal Service, Federal
Express or overnight courier. If any notice is transmitted by
facsimile transmission or similar means, the notice shall be deemed
served or delivered upon telephone confirmation of receipt of the
transmission, provided a copy is also delivered via delivery or mail.
7.8 ASSIGNMENT. Except as specified in Section 7.12 below, this Agreement
and the rights, interests and benefits hereunder shall not be assigned,
transferred or pledged in any way by Medical Group or Health Plan and
shall not be subject to execution, attachment or similar process.
However, Health Plan may assign this Agreement and its rights, interests
and benefits hereunder to any entity which is a corporate affiliate of
Health Plan.
7.9 AMENDMENTS
7.9.1 AMENDMENTS TO MANAGED CARE PLANS. Health Plan may amend or
change any or all provisions of the Managed Care Plans by providing
thirty (30) calendar days prior written notice to Medical Group. Such
amendment shall be binding upon Medical Group at the end of the thirty
(30) calendar day period. However, Health Plan shall obtain Medical
Group's written consent to the terms governing Medical Group's
provision of Covered Services under a Managed Care Plan, if the
Managed Care Plan is not, at the time of its addition to this
Agreement, one of the Product Attachments to this Agreement.
7.9.2 AMENDMENTS TO PROVIDER MANUAL. Health Plan may amend the
Provider Manual by providing thirty (30) calendar days prior written
notice to Medical Group. Such amendments shall be binding upon Medical
Group at the end of the thirty (30) calendar day period, except as
provided in Section 7.9.4 of this Agreement.
7.9.3 AMENDMENTS TO AGREEMENT. Health Plan may amend this Agreement
by providing thirty (30) calendar days prior written notice to Medical
Group in order to maintain compliance with State and Federal Law or to
comply with any directive from a Government Agency. Such amendment
shall be binding upon Medical Group at the end of the thirty (30)
calendar day period, except as provided in Section 7.9.4 of this
Agreement. All other amendments to this Agreement shall be effective
only upon mutual written agreement of the parties or as provided in
Section 7.9.4 of this Agreement.
7.9.4 MATERIAL AMENDMENTS. In the event Health Plan provides notice of
amendment to the Agreement or the Provider Manual or provides notice
of a material change in benefits under any Managed Care Plan, Medical
Group shall be bound by such amendment unless (i) Medical Group
provides Health Plan with notice of objection within the thirty (30)
calendar day notice period, and (ii) such change affects a material
duty or responsibility of Medical Group, and (iii) the change has a
material adverse economic effect upon Medical Group as reasonably
demonstrated by Medical Group to Health Plan. In such event, Medical
Group and Health Plan shall seek to agree to an amendment to this
Agreement which satisfactorily addresses the effect on Medical
Group's material duty or responsibility and reimburses the material
economic detriment caused to Medical Group. In such event, the
amendment shall not be effective until the parties amend the
Agreement through a written amendment signed by both parties.
Notwithstanding the above, in the event that Health Plan disagrees
with Medical Group's notice of objection and seeks to enforce any
amendment despite such notice, Health Plan agrees that it will meet
with Medical Group in an attempt to resolve the disagreement and if
the disagreement cannot be resolved through meetings, Medical Group
may submit the disagreement to arbitration in accordance with the
provisions of this Agreement.
7.9.5 AMENDMENTS TO REFLECT SYSTEMS CHANGES. In the event Health
Plan undergoes systems changes which are not anticipated at the time
of the execution of the Agreement, the parties will negotiate in good
faith to revise the Agreement, to the extent amendments to the
Agreement are necessary, for the limited purpose of accommodating the
necessary systems changes.
7.10 CONFIDENTIAL AND PROPRIETARY INFORMATION
7.10.1 INFORMATION CONFIDENTIAL AND PROPRIETARY TO HEALTH PLAN.
Medical Group and its Participating Providers shall maintain
confidential all information designated in this Section. The
information which Medical Group and its Participating Providers shall
maintain confidential (the "Confidential Information") consists of:
(i) the Eligibility List and any other information containing the
names, addresses and telephone numbers of Members which has been
compiled by Health Plan; (ii) lists or documents compiled by Health
Plan which include the names, addresses and telephone numbers of
employers, employees of such employers responsible for health benefits
and the officers and directors of such employers; (iii) Health Plan's
Provider Manual and any of Health Plan's member, employer and
administrative service manuals and all forms related thereto; (iv) the
financial arrangements between Health Plan and any of Health Plan's
Participating Providers; (v) Health Plan underwriting and rating
information and any other information utilized by Health Plan for
determining eligibility or rates for the Managed Care Plans; and (vi)
any other information compiled or created by Health Plan which is
proprietary to Health Plan and which Health Plan identifies in writing
to Medical Group.
7.10.2 NON-DISCLOSURE OF CONFIDENTIAL INFORMATION. Medical Group and
its Participating Providers shall not disclose or use the Confidential
Information for their own benefit or gain either during the term of
this Agreement or after the date of termination of this Agreement.
Medical Group and its Participating Providers may use the Confidential
Information to the extent necessary to perform their duties under this
Agreement or upon express prior written permission of Health Plan.
Upon the effective date of termination of this Agreement, Medical
Group and its Participating Providers shall provide and return to
Health Plan the Confidential Information in their possession in the
manner specified by Health Plan.
7.10.3 INFORMATION CONFIDENTIAL AND PROPRIETARY TO MEDICAL GROUP.
Medical Group shall provide Health Plan with a written description of
all information proprietary to Medical Group which is confidential and
contains trade secrets of Medical Group (the "Medical Group
Information"). Health Plan shall maintain and shall cooperate with
Medical Group to maintain the confidentiality of Medical Group
Information. Health Plan shall not disclose or use any Medical Group
Information for its own benefit either during the term of this
Agreement or after the effective date of termination of this
Agreement. Upon termination of this Agreement, Health Plan shall
provide and return to Medical Group all Medical Group Information in
its possession in the manner to be specified by Medical Group.
7.10.4 NAMES, LOGOS AND SERVICE MARKS. Medical Group shall obtain the
written consent of Health Plan prior to using Health Plan's name,
product names, logos and service marks in any of Medical Group's
promotional, marketing or advertising materials or for any other
reason. Health Plan shall obtain the written consent of Medical Group
prior to using Medical Group's name, product names, logos and service
marks in any of Health Plan's promotional, marketing or advertising
materials or for any other reason; provided, however, that Health Plan
may utilize Medical Group's name and address in any of Health Plan's
publications which list the names of Health Plan's contracting
providers without Medical Group's specific consent.
7.11 SOLICITATION OF HEALTH PLAN MEMBERS OR SUBSCRIBER GROUPS. Medical Group
and its Participating Providers shall not directly or indirectly engage
in the practice of solicitation of Members, Subscribers and Subscriber
Groups without Health Plan's prior written consent. Solicitation shall
mean conduct by an officer, agent, employee of Medical Group or its
Participating Providers or their respective assignees or successors
during the term of this Agreement, during any termination notice period
and during the continuing care period described in Section 8.3 which may
be reasonably interpreted as designed to persuade Members, Subscribers or
Subscriber Groups to disenroll from any Managed Care Plan or discontinue
their relationship with Health Plan for any reason. Notwithstanding any
other provision of this Agreement, Medical Group agrees that Health Plan
shall, in addition to any other remedies provided for under this
Agreement, have the right to seek a judicial temporary restraining order,
preliminary injunction, or other equitable relief against Medical Group
and its Participating Providers to enforce its rights under this Section.
7.12 APPROVAL BY HEALTH PLAN OF SALE OR CHANGE IN OWNERSHIP AND CONTROL OF
MEDICAL GROUP. For a period of two (2) years following the Commencement
Date of this Agreement, Health Plan shall have the right to consent to
any proposed sale or change in control of Medical Group or Talbert
Medical Management Corporation ("TMMC"), which consent shall not be
unreasonably withheld by Health Plan. A change in control of Medical
Group or of TMMC shall include any transfer of Medical Group management
functions to a successor entity which is a management company or any
merger, consolidation or sale of TMMC or Medical Group where any
individual, entity or group acquires beneficial ownership of fifty
percent (50%) or more of the voting common stock of TMMC or Medical Group
or any transaction in which TMMC or Medical Group sells its business or
substantially all of its material assets to a successor entity. The
parties acknowledge and agree that, during the two (2) year period
following the Commencement
Date of this Agreement, Health Plan may reasonably withhold its consent
if the proposed sale or change of control is to an individual, entity or
group that operates HMOs or holds Medicare risk contracts with HCFA.
Medical Group warrants and assures that (i) this Agreement will be
assumed by all successor entities to Medical Group, (ii) all successor
entities to Medical Group will be bound by the terms and conditions of
this Agreement, and (iii) all successor entities to TMMC shall execute a
guaranty identical in form to, that certain Guaranty of Performance, of
even date with this Agreement, executed by TMMC in favor of Health Plan.
In the event that any successor entities to Medical Group assume this
Agreement and have one or more existing provider agreements with Health
Plan ("the existing provider agreement"), Health Plan shall have the
right, in its sole discretion, to require that the successor entities to
Medical Group be bound by the provisions of either: (i) this Agreement;
or (ii) the existing provider agreement; or (iii) a combination of this
Agreement and the existing provider agreement, with respect to any or all
Health Plan Members assigned to Medical Group or successor entities to
Medical Group, as shall be specified by Health Plan by written notice to
the successor entities or management companies. The agreement or
agreements elected by Health Plan for coverage of Health Plan Members
under this Section shall supersede any and all other agreements for such
coverage.
As a condition to Health Plan's consent under this Section, Health Plan
may require successor entities to execute documentation furnished by
Health Plan evidencing their agreement to abide by accordance with the
provisions of this Section.
7.13 CONFIDENTIALITY OF THIS AGREEMENT. To the extent reasonably possible,
each party agrees to maintain this Agreement as a confidential document
and not to disclose the Agreement or any of its terms without the
approval of the other party.
7.14 INVALIDITY OF SECTIONS OF AGREEMENT. The unenforceability or invalidity
of any paragraph or subparagraph of any section or subsection of this
Agreement shall not affect the enforceability and validity of the balance
of this Agreement.
7.15 CAPTIONS. Captions in this Agreement are descriptive only and do not
affect the intent or interpretation of the Agreement.
7.16 WAIVER OF BREACH. The waiver by either party to this Agreement of a
breach or violation of any provision of this Agreement shall not operate
as or be construed to be a waiver of any subsequent breach or violation
thereof.
7.17 ATTORNEYS' FEES AND COSTS. If any action at law or suit in equity is
brought to enforce or interpret the provisions of this Agreement or to
collect any monies due hereunder, the prevailing party shall be entitled
to reasonable attorneys' fees and reasonable costs, together with
interest thereon at the highest rate provided by law, in addition to any
and
all other relief to which it may otherwise be entitled.
7.18 MEDICAL GROUP'S AUTHORIZED REPRESENTATIVE. Unless otherwise indicated in
writing to Health Plan, Medical Group warrants and authorizes Talbert
Medical Management Corporation to act as its fully authorized
representative to represent Medical Group in this Agreement and to
receive any and all communications and notices hereunder.
7.19 NO THIRD PARTY BENEFICIARIES. This Agreement shall not create any rights
in any third parties who have not entered into this Agreement, nor shall
this Agreement entitle any such third party to enforce any rights or
obligations that may be possessed by such third party.
7.20 ENTIRE AGREEMENT. This Agreement, including all exhibits, attachments
and amendments hereto, contains all the terms and conditions agreed upon
by the parties regarding the subject matter of this Agreement. Any prior
agreements, promises, negotiations or representations of or between the
parties, either oral or written, relating to the subject matter of this
Agreement, which are not expressly set forth in this Agreement are null
and void and of no further force or effect.
7.21 INCORPORATION OF EXHIBITS, ATTACHMENTS AND PROVIDER MANUAL. The exhibits
and attachments to this Agreement and the Provider Manual are an integral
part of this Agreement and are incorporated in full herein by this
reference.
7.22 MEDICAL GROUP COVENANT NOT TO COMPETE. During the term of this
Agreement, including any renewal term, Medical Group and its
Participating Providers agree not to, directly or indirectly, seek or
obtain a contract with the Health Care Finance Administration for the
purpose of offering a Medicare-risk program or benefit plan. This
section shall not be interpreted to prevent Medical Group and its
Participating Providers from providing or arranging for Covered Services
to Medical Group Members in coordination with Health Plan under the terms
specified in this Agreement or from providing or arranging health care
services pursuant to a contract between Medical Group and any other
licensed health maintenance organization or competitive medical plan.
7.22.1 INDIRECTLY DEFINED. For purposes of this section, the use of
the term "indirectly" shall mean activity of, or conducted by, or
through, any subsidiary or affiliate of Medical Group.
7.22.2 EQUITABLE RELIEF. Medical Group acknowledges and agrees that it
would be difficult to measure the damage to Health Plan from any breach
of Medical Group's obligations under Section 7.22, that injury to Health
Plan from any such breach would be impossible to calculate and that
money damages would therefore be an inadequate remedy for any such
breach. Therefore, Medical Group acknowledges and agrees that Health
Plan, in addition to any of its other rights
or remedies, shall be entitled to seek injunctive and other equitable
relief in the event of an actual or threatened breach of Section 7.22.
7.23 GUARANTY OF PERFORMANCE BY TMMC. Notwithstanding anything to the
contrary herein, this Agreement shall not become effective unless and
until Talbert Medical Management Corporation executes a Guaranty of
Performance in favor of Health Plan, in a form acceptable to Health Plan,
which unconditionally guarantees all of the obligations of Medical Group
under this Agreement.
7.24 AUDIT. Health Plan agrees that Medical Group shall, upon request and
provision of reasonable notice, have the right to audit claims processed
by the Health Plan on behalf of Medical Group under this Agreement.
7.25 BOARD APPROVAL. This Agreement shall be subject to the prior approval of
the Boards of Directors for TMMC and FHP International Corporation, the
ultimate parent of Health Plan, which approval shall be considered at
board meetings of each corporation.
ARTICLE 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 California and
the United States of America, including, without limitation, the Knox-
Keene Health Care Service Plan Act of 1975, as amended, and the
regulations adopted thereunder by the California Department of
Corporations, the federal Health Maintenance Organization Act of 1973, as
amended, and the regulations adopted thereunder by the United States
Department of Health and Human Services. Any provisions required to be
in this Agreement by State and Federal Law or by Government Agencies
shall bind Health Plan and Medical Group whether or not expressly
provided in this Agreement.
8.2 NO BILLING OF MEMBERS (MEMBER HOLD HARMLESS PROVISION). With the
exception of Copayments and charges for non-covered services delivered on
a fee-for-service basis to Members, Medical Group shall in no event,
including, without limitation, non-payment by Health Plan, insolvency of
Health Plan, or breach of the Agreement, bill, charge, collect a deposit
from, or attempt to bill, charge, collect or receive any form of payment
from any Member for Covered Services provided or arranged pursuant to
this Agreement.
Medical Group and its Participating Providers shall not maintain any
action at law or equity against a Member to collect sums owed by
Health Plan to Medical Group. Upon notice of any such action, Health
Plan may terminate this Agreement as provided above and take all other
appropriate action consistent with the terms of this Agreement to
eliminate such charges, including, without limitation, requiring
Medical Group and its Participating Providers to return all sums
collected as Surcharges from Members or their representatives. For
purposes of this Agreement, "Surcharges" are additional fees for
Covered Services which are not disclosed to Members in the Subscriber
Agreement, are not allowable Copayments and are not authorized by this
Agreement. Nothing in this Agreement shall be construed to prevent
Medical Group from providing non-Covered Services on a usual and
customary fee-for-service basis to Members.
Medical Group's obligations under this Section shall survive the
termination of this Agreement with respect to Covered Services
provided or arranged during or after the term of this Agreement,
regardless of the cause giving rise to such termination.
8.3 CONTINUING CARE OBLIGATIONS OF MEDICAL GROUP. In the event of
termination of this Agreement for any reason, Medical Group and its
Participating Providers shall continue to provide or arrange Covered
Services to Members, including any Members who become eligible during the
termination notice period, beginning on the effective date of termination
and continuing until the termination or next renewal date of the Member's
Subscriber Agreement, unless Health Plan arranges for the transfer of the
Member to another Health Plan Participating Provider and provides written
notice to Medical Group of such transfer prior to the termination or next
renewal date of the Subscriber Agreement. Notwithstanding the foregoing,
Medical Group and its Participating Providers will continue to provide or
arrange Covered Services to any Members who cannot be transferred within
the time period specified above in accordance with Health Plan's legal
and contractual obligations to (i) provide Covered Services under the
Managed Care Plans and Subscriber Agreements, (ii) provide notice of
termination to Members and (iii) ensure continuity of care for its
Members.
Notwithstanding the above or any other provisions to the contrary,
Medical Group agrees that in the event Health Plan ceases operations
for any reason, including insolvency, Medical Group shall provide or
arrange Covered Services and shall not bill, charge, collect or
receive any form of payment from any Member for Covered Services
provided after Health Plan ceases operations. This continuation of
Covered Services obligation shall be for the period for which Premium
has been paid, but shall not exceed a period of thirty (30) calendar
days, except for those Members who are hospitalized on an inpatient
basis as provided below.
In the event Health Plan ceases operations or Medical Group terminates
this Agreement on the basis of Health Plan's failure to make timely
Capitation Payments, Medical Group shall continue to arrange for
Covered Services to those Members who are hospitalized on an inpatient
basis at the time Health Plan ceases operations or Medical Group
terminates this Agreement until such Members are discharged from the
hospital. Medical Group may file a claim with Health Plan for such
services as previously specified in this Section.
Medical Group agrees that the provisions of this Section and the
obligations of Medical Group
and its Participating Providers herein shall survive termination of
this Agreement regardless of the cause giving rise to such
termination, and shall be construed to be for the benefit of Members.
8.4 INSPECTION AND AUDIT OF RECORDS AND FACILITIES. Medical Group and its
Participating Providers shall provide access at reasonable times upon
demand by Health Plan, Accreditation Organizations and Governmental
Agencies to periodically audit or inspect the facilities, offices,
equipment, books, documents and records of Medical Group and its
Participating Providers relating to the performance of this Agreement and
the Covered Services provided to Members, including, without limitation,
all phases of professional and ancillary medical care provided or
arranged for Members by Medical Group and its Participating Providers,
Member medical records and financial records pertaining to the cost of
operations and income received by Medical Group for Covered Services
rendered to Members. Medical Group and its Participating Providers shall
comply with any requirements or directives issued by Health Plan,
Accreditation Organizations and Government Agencies as a result of such
evaluation, inspection or audit of Medical Group and its Participating
Providers. The provisions of this Section shall survive termination of
this Agreement for the period of time required by State and Federal Law.
8.5 NONDISCRIMINATION. Medical Group assures that Covered Services shall be
provided to Members in the same manner as such services are provided to
other patients of Medical Group and its Participating Providers, except
as required pursuant to this Agreement. Medical Group and its
Participating Providers shall not unlawfully discriminate against any
Member on the basis of source of payment or in any manner in regards to
access to, and the provision of, Covered Services. Medical Group and its
Participating Providers shall not unlawfully discriminate against any
Member, employee or applicant for employment on the basis of race,
religion, color, national origin, ancestry, physical handicap, medical
condition, marital status, age or sex.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement in
, on , 199 .
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PACIFICARE OF CALIFORNIA
By:
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Title:
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Address (for purposes of receiving notice)
5701 Katella Avenue
Cypress, California 90630
For and on Behalf of MEDICAL GROUP
By:
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Title:
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Address (for purposes of receiving notice)
3540 Howard Way
Costa Mesa, California 92626
Attn: Business Development