UNITED WISCONSIN SERVICES, INC.
BOARD OF DIRECTORS MEETING
FEBRUARY 26, 1997
INTERCOMPANY SERVICES AGREEMENT RESOLUTION
WHEREAS, Blue Cross & Blue Shield United of Wisconsin ("BCBSUW") provides
various services to United Wisconsin Services, Inc., and its subsidiaries
(the "Corporation"); and
WHEREAS, the Corporation provides various services to BCBSUW; and
WHEREAS, charges for such services are allocated between BCBSUW and the
Corporation at approximate cost; and
WHEREAS, BCBSUW and the Corporation have documented these cost
allocations and the associated intercompany charges for calendar year 1997 in
the attached Service Agreement; and
WHEREAS, the members of the Board have reviewed the attached Service
Agreement and consider it fair and equitable to both parties;
NOW, THEREFORE, BE IT RESOLVED AS FOLLOWS:
RESOLVED, that the appropriate officers of the Corporation hereby are
authorized and directed to enter into the attached Service Agreement.
FURTHER RESOLVED, that the appropriate officers of the Corporation hereby
are authorized to enter into separate service agreements that implement the
terms and conditions of the attached Service Agreement between any of the
Corporation's subsidiaries or between BCBSUW and any of the Corporation's
subsidiaries.
BLUE CROSS & BLUE SHIELD UNITED OF WISCONSIN
BOARD OF DIRECTORS MEETING
FEBRUARY 26, 1997
INTERCOMPANY SERVICES AGREEMENT RESOLUTION
WHEREAS, Blue Cross & Blue Shield United of Wisconsin (the "Corporation")
provides various services to United Wisconsin Services, Inc., and its
subsidiaries ("UWS"); and
WHEREAS, UWS provides various services to the Corporation; and
WHEREAS, charges for such services are allocated between the Corporation
and UWS at approximate cost; and
WHEREAS, the Corporation and UWS have documented these cost allocations
and the associated intercompany charges for calendar year 1997 in the
attached Service Agreement; and
WHEREAS, the members of the Board have reviewed the attached Service
Agreement and consider it fair and equitable to both parties;
NOW, THEREFORE, BE IT RESOLVED AS FOLLOWS:
RESOLVED, that the appropriate officers of the Corporation hereby are
authorized and directed to enter into the attached Service Agreement.
FURTHER RESOLVED, that the appropriate officers of the Corporation hereby
are authorized to enter into separate service agreements that implement the
terms and conditions of the attached Service Agreement between any of the
Corporation's subsidiaries or between BCBSUW and any of the Corporation's
subsidiaries.
SERVICE AGREEMENT
BETWEEN
BLUE CROSS & BLUE SHIELD UNITED OF WISCONSIN
AND
UNITED WISCONSIN SERVICES, INCORPORATED
This Agreement is effective the 1st day of January, 1997 by and between Blue
Cross and Blue Shield United of Wisconsin, a Wisconsin Corporation,
hereinafter referred to as BCBSUW, and United Wisconsin Services,
Incorporated, hereinafter referred to as UWS.
WITNESSETH
In consideration of the mutual covenants and agreements hereinafter set
forth, the parties do hereby and for their successors and assigns agree as
follows:
ARTICLE I: This Service Agreement shall be effective January 1, 1997,
replaces and supersedes all other service agreements, supplements, amendments
and modifications entered into between the parties.
ARTICLE II: In consideration of the payment of charges specified by the
Agreement and its amendment, BCBSUW will provide the service specified in
Article III in connection with UWS' operation and vice versa.
A. BCBSUW will provide the services shown on Exhibit 1 and incorporated
herein by reference to UWS for an estimated fee, the fee being established by
amendment to this Agreement annually. Actual amount to be charged will be
based on various allocations methodologies as specified on Exhibit 1.
B. UWS will provide the services shown on Exhibit 2 and incorporated herein
by reference to Blue Cross for an estimated fee, the fee being established by
amendment to this Agreement annually. Actual amount to be charged will be
based on various allocation methodologies as specified on Exhibit 2.
C. BCBSUW will reimburse UWS on an actual cost basis, as billed for costs
incurred on BCBSUW's behalf, as shown on Exhibit 3.
D. UWS will reimburse BCBSUW on an actual cost basis, as billed, for costs
incurred on UWS' behalf, as specified on Exhibit 4.
ARTICLE IV: The services stated in Article III-A and III-B shall be reported
to UWS via a quarterly report. The amount due BCBSUW and/or UWS will be
approximated each month based on the prior month's actual expense. This
amount shall be adjusted to actual at least annually. The 1997 annual budget
is shown on Exhibit 5.
ARTICLE V: BCBSUW and UWS mutually agree that this Service Agreement is not
an exclusive one.
ARTICLE VI: This Agreement shall be in effect for one (1) year commencing
January 1, 1997 and ending December 31, 1997, unless terminated in accordance
with the provisions of Article VII. This Agreement shall be automatically
renewed for a period of one (1) year on each succeeding January 1, subject to
negotiation of the rates and allocations shown on the exhibits.
ARTICLE VII: This Agreement or any portion of it may be terminated or
amended by either party upon receipt of a 90-day written notice to the other
party.
ARTICLE VIII, FORCE MAJEURE: Neither of the parties to this Agreement shall
be considered in default in performance of its obligations hereunder if
performance of such obligations is prevented or delayed by an Act of God, or
other circumstances beyond the control of the non-performing party. Time of
performance of either party shall be extended by the time period reasonably
necessary to overcome the effects of such force majeure occurrences.
ARTICLE IX, INTERPRETATION: This Agreement shall be construed in accordance
with the laws of the State of Wisconsin.
ARTICLE X, INTEGRATION: This Agreement, including only modifications or
amendments agreed to in writing and incorporated herein by reference,
expresses the entire understanding and agreement of the parties with
reference to the subject matter hereof, and is a complete and exclusive
statement of the terms of this Agreement, and no representations or
agreements modifying or supplementing the terms of this Agreement be valid
unless in writing, and signed by persons authorized to sign agreements on
behalf of both parties.
Executed at Milwaukee, Wisconsin, this ___ day of _________, 1997
BLUE CROSS & BLUE SHIELD
UNITED OF WISCONSIN
By:
------------------------------------
Authorized Signature
Executed at Milwaukee, Wisconsin, this ___ day of _________, 1997
UNITED WISCONSIN SERVICES, INC.
By:
------------------------------------
Authorized Signature
Blue Cross & Blue Shield United of Wisconsin
UWS Service Agreement
Article III, Section A, Exhibit 1
1997
Listed below are the various allocation methodologies by operational
unit/specific cost center that will be utilized in 1997.
Subordinate Cost:
- - BCBSUW Regional Vice Presidents
- - Director BCBSUW Administration
- - Regional Operations Administration
- - AVP BCBSUW Finance/Underwriting
- - Director of SE/CHS Operations
- - Director SE FDEE/Nat'l/Govt Operations
- - Director BCBSUW Underwriting
- - S/E Benefits/Provider Administration
Staff Counts:
- - BCBSUW Mail Room
- - Credit Union
- - Office Services
- - Building Services
Time Sheets:
- - BCBSUW Finance (CC #377)
- - Benefit File Coding
- - BCBSUW Regional Provider Services
- - Documentation and Training
- - Contract & Booklet
- - CIS Core Systems
- - Quality Assurance
- - System Development
- - Information Support Services
Fixed Percentages:
- - BCBSUW President
- - BCBSUW Finance (CC #312, #313)
- - BCBSUW Administration (CC #325)
- - BCBSUW Underwriting (CC #338)
Claim Counts:
- - Micrographics
- - Electronic Claim Acquisition
- - Regional Claim Operations
- - Medical/Dental Review
Blue Cross & Blue Shield United of Wisconsin
UWS Service Agreement
Article III, Section A, Exhibit 1
1997
(Page 2)
Contract Counts
- - MMAC Processing Unit
- - Enrollment Services
- - Regional Office Membership
Premium:
- - Labor Relations
Claims Expense:
- - Provider File Maintenance
Actual Dollars:
- - EDS
- - BCBSSC Implementation
Commission-Based Sales Chargeback - Direct
- - Regional Direct Sales
- - Sales Bonus
- - Meetings and Conference
- - Sales Training
Commission-Based Sales Chargeback - Agency
- - Agency Sales
- - Sales Bonus
- - Meetings and Conference
- - Sales Training
Charges for other functions will be negotiated prior to the performance of
the service.
Blue Cross & Blue Shield United of Wisconsin
UWS Service Agreement
Article III, Section B, Exhibit 2
1997
Listed below are the various allocation methodologies by operational
unit/specific cost center for charges from UWS that will be utilized in 1997.
Subordinate Costs:
- - VP and CIO
- - VP Legal and General Counsel
- - VP and Chief Actuary
- - Director of Technology Support Services
- - Director Corporate Planning and Reporting
- - Director of Investigation/recovery
Staff Counts:
- - Human Resources/Payroll
- - Corporate Compliance
Time Sheet:
- - Financial Audit
- - Data Management and Reporting
- - UWS Public Relations (except CC #44)
- - Legal staff
- - Actuarial CHS/AMS
- - CIS - UWS
- - Dentacare Quality Assurance
- - Network Management
Fixed Percentages:
- - UWS Finance (CC #720, #721, #722, #723, #742, and #799)
- - UWS Actuarial (CC #735)
- - Compcare Medical Management (CC #262, 263, #266)
- - Director Dentacare
- - Compcare Provider Contracting
Corporate Dollars:
- - UWS CEO
- - Executive VP and COO
- - VP and Chief Actuary
- - VP and CFO
- - Government Relations
- - Cost Allocation
- - Financial Systems
Miscellaneous:
- - Recovery Services (based on dollars recovered)
- - Financial Investigation (based on dollars recovered)
- - Right Rx (PMPM charges)
Charges for other functions will be negotiated prior to the performance of
the service.
Blue Cross & Blue Shield United of Wisconsin
UWS Service Agreement
Article III, Section C, Exhibit 3
Charges from UWIC for services performed in conjunction with processing of
joint billed products:
DEPARTMENT SERVICES UNIT OF ALLOCATION
---------- -------- ------------------
Membership Group set-up, Maintenance Division
Membership Membership Maintenance Lives
Info. Services System Update & Reports Lives
Premium Cash MMAC Premium Proc. Actual
Corporate Management Lives
Finance Commission Payments Actual
1997 Charges from Meridian Managed Care, Inc. to BCBSUW for services
performed:
SERVICES RATE
-------- ----
Professional Services:
Medical Director $190 per hour plus travel expenses
Assistant Medical Director $115 per hour plus travel expenses
Medical Consultants $92 per hour plus travel expenses
Health Policy/Pricing $52 per hour plus travel expenses
Util. Mgmt. - Nurse $52 per hour plus travel expenses
Util. Mgmt. - Supervisor $62 per hour plus travel expenses
Hospital Bill Audit $80.00 per hour
2 to 1 Savings Guarantee to be
calculated at year-end on
total BCBSUW insured business
Utilization Management:
Medcheck I/Advantage - Insured
(Excludes Second Surgical Opinion $2.36 pcpm
Medcheck II/Advantage - Insured
Medcheck Second Surgical Opinion $2.41 pcpm
Prenatal Program - Coalitions $0.62 pcpm
Preferred One $1.35 pcpm
Quality Choice $0.71 pcpm
Insured POS $3.50 pcpm
BCBSUW Group #1 - Self-Insured
(Includes Second Surgical Opinion) $2.41 pcpm
BCBS Design Healthcare Group #1 - POS $3.50 pcpm
Options Plus - Self-Insured
(Includes Second Surgical Opinion) $2.41 pcpm
Homecare Review/Referral $5,500/month
Inpatient Psych Review
admissions at four for-profit
psych hospitals $578/month
Other expenses as services are requested
at an agreed upon rate.
Blue Cross & Blue Shield United of Wisconsin UWS Service Agreement
Article III, Section D, Exhibit 4
1997
Expenses are paid by BCBSUW on behalf of UWS as a result of a common Trade
payable and Payroll system. At time of payment, expenses are identified as
to "user" area, and are expensed to the specific "users" cost center.
Expenses include, but are not limited to:
Direct Compensation - Salaries/Wages, Bonus, Profit Sharing
Payroll Taxes
Fringe Benefits - Insurance, 401K, Pension
Employee Relations - O.T. Meals, Employee Welfare
Agency help
Travel & Entertainment
Company car - Lease, gas, mileage reimbursement, auto insurance
FF & E - Bldg. rent , Depreciation, Equip. & Furniture rental,
software purchases, minor furniture & Equipment
communications - Telephone usage, postage/freight, forms, supplies,
organization dues
Advertising
Outside Management fees
BCBSUW AND UWSI
OPERATING EXPENSE ALLOCATIONS
AOP 1997
- --------------------------------------------------------------------------------------------------------------------------------
MEDICARE CHS NORTHWOODS
BCBSUW CHSIC RIGHT Rx RxCEL DENTACARE RISK MEDICAID DULUTH HMO
DOLLARS DOLLARS DOLLARS DOLLARS DOLLARS DOLLARS DOLLARS DOLLARS DOLLARS
------- ------- -------- ------- ------- ------- ------- ------- --------
BCBSUW
PRESIDENT 3,529,807 299,530 672 0 11,771 0 6,257 0 0
ADMINISTRATION 4,626,552 974,623 0 0 90,977 10,573 7,089 2,025 1,013
FINANCE 4,916,639 820,128 279 0 35,724 279 0 0 0
UNDERWRITING 1,210,471 94,152 8,444 0 11,526 211 0 0 0
MARKETING 1,699,847 558,134 0 0 5,994 0 0 0 0
AGENCY SALES 573,654 424,660 0 0 27,664 0 0 0 0
DIRECT SALES 0 0 0 0 0 0 0 0 0
HOMETOWN 419,656 26,560 0 0 26,560 0 0 0 0
HOMETOWN AGENCY 143,422 16,298 0 0 19,558 0 0 0 0
SALES BONUS & CONFER 531,859 1,416 0 0 672 0 0 0 0
SOUTHEAST 12,159,744 1,071,199 660 0 160,430 0 36,307 0 0
BCBSUW NON METRO VP 1,263,956 31,516 0 0 0 21,665 0 108,126 108,126
WESTERN 3,325,129 0 0 0 40,017 0 0 242,528 0
NORTHEAST 4,500,042 80,837 0 0 29,438 0 76,986 0 0
NORTH CENTRAL 3,385,306 0 0 0 124,223 15,099 0 0 107,009
SOUTHWEST 3,728,155 281,884 0 0 71,569 3,516 60,656 0 0
OTHER 18,884,631 4,743,269 20,940 181 588,667 7,386 21,172 3,666 1,496
TOTAL BCBSUW 64,898,870 9,424,206 30,995 181 1,244,790 58,729 208,467 356,345 217,644
---------- --------- ------ --- --------- ------ ------- ------- -------
---------- --------- ------ --- --------- ------ ------- ------- -------
- ----------------------------------------------------------------------------------------------------------------------------------
MANAGED UNITED
VALLEY MERIDIAN CARE UWG UDT UWSI MMS HEARTLAND UNITY TOTAL
DOLLARS DOLLARS DOLLARS DOLLARS DOLLARS DOLLARS DOLLARS DOLLARS DOLLARS DOLLARS
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
BCBSUW
PRESIDENT 700 700 1,300 3,109 7,117 0 345,305 1,300 300 4,207,868
ADMINISTRATION 19,241 38,304 72,914 70,526 20,255 0 413,955 26,330 1,216 6,375,593
FINANCE 0 0 0 226 12,667 0 166,198 0 0 5,952,140
UNDERWRITING 0 0 0 0 0 0 0 0 0 1,324,804
MARKETING 0 0 0 0 0 0 0 0 0 2,263,975
AGENCY SALES 18,837 0 3,767 71,885 0 0 0 0 0 1,120,467
DIRECT SALES 0 0 0 0 0 0 0 0 0 0
HOMETOWN 0 0 5,312 53,121 0 0 0 0 531,209 1,062,418
HOMETOWN AGENCY 0 0 0 0 9,779 0 0 0 136,904 325,961
SALES BONUS & CONFER 624 0 0 11,280 2,035 0 1,704 0 156,708 706,298
SOUTHEAST 0 0 0 62,895 1,310 0 82,824 0 0 13,575,369
BCBSUW NON METRO VP 21,665 0 0 2,167 488 0 223,941 0 21,665 1,803,315
WESTERN 255,555 0 0 15,785 295,470 0 0 185 28,497 4,203,166
NORTHEAST 0 0 0 40,574 588 0 37,959 0 23,678 4,790,102
NORTH CENTRAL 0 0 0 38,955 20,171 0 75,175 588 136,682 3,903,208
SOUTHWEST 0 0 0 0 2,504 0 17,582 0 119,510 4,285,376
OTHER 33,772 63,118 192,655 190,941 210,041 6,240 4,377,744 67,716 9,158 29,422,793
TOTAL BCBSUW 350,394 102,122 275,948 561,464 582,425 6,240 5,742,387 96,119 1,165,527 85,322,853
------- ------- ------- ------- ------- ----- --------- ------ --------- ----------
------- ------- ------- ------- ------- ----- --------- ------ --------- ----------
BCBSUW AND UWSI
OPERATING EXPENSE ALLOCATIONS
AOP 1997
- -----------------------------------------------------------------------------------------------------------------------------------
MEDICARE CHS NORTHWOODS
BCBSUW CHSIC RIGHT Rx RxCEL DENTACARE RISK MEDICAID DULUTH HMO
DOLLARS DOLLARS DOLLARS DOLLARS DOLLARS DOLLARS DOLLARS DOLLARS DOLLARS
------- --------- -------- ------- --------- -------- --------- ------- ----------
CHSIC
FINANCE 108,061 2,680,191 107,288 75,850 460,049 58,107 236,467 0 15,161
MARKETING 126,911 1,202,396 10,694 0 72,742 1,782 0 0 0
OPERATIONS 864,222 4,237,723 0 864 395,776 17,708 783,728 707 6,184
UNALLOCATED 52,371 957,175 0 0 62,722 0 0 0 0
TOTAL CHSIC 1,151,565 9,077,485 117,982 76,714 991,289 77,597 1,020,195 707 21,345
--------- --------- ------- ------ --------- ------- --------- ------- -------
--------- --------- ------- ------ --------- ------- --------- ------- -------
TOTAL DENTACARE 0 0 0 0 873,405 0 0 0 0
--------- --------- ------- ------ --------- ------- --------- ------- -------
--------- --------- ------- ------ --------- ------- --------- ------- -------
TOTAL RIGHT Rx CHARGE 332,063 412,401
TOTAL RxCEL CHARGE 79,678
MERIDIAN
PRESIDENT
PRESIDENT 8,256 1,201 150 150 375 0 0 0 0
RECOVERY 927,400 392,641 0 0 0 0 0 0 0
TOTAL MERIDIAN 935,656 393,842 150 150 375 0 0 0 0
MERIDIAN MRKT SRVS
VP 0 0 0 0 0 0 0 0 0
SPEC MKTS PROJECT 19,352 7,742 3,871 0 7,742 58,442 0 0 3,871
TELEMARKETING 0 0 0 0 0 0 0 0 0
OPERATIONS (1) 0 0 0 0 629,352 0 0 0
TOTAL MERIDIAN MRKT SRVS 19,351 7,742 3,871 0 7,742 687,794 0 0 3,871
MANAGED CARE
MEDICAL DIRECTOR 208,930 228,497 3,532 3,532 0 39,130 0 0 19,565
D M AND R 291,828 68,417 0 0 0 0 0 0 0
ASST MEDICAL DIREC 293,041 98,092 0 0 0 0 0 0 0
--------- --------- ------- ------ --------- ------- --------- ------- -------
TOTAL MANAGED CARE 793,799 395,006 3,532 3,532 0 39,130 0 0 19,565
UWSI
PRESIDENT 4,515,996 1,364,996 8,371 10,813 163,536 31,205 45,542 12,379 12,233
LEGAL 1,278,316 244,094 0 2,537 15,240 21 24 7 3
FINANCE 3,493,450 1,127,321 46,013 31,295 96,442 22,589 11,982 3,545 4,169
OTHER 58,893 58,491 0 0 2,010 402 2,211 0 0
TOTAL UWSI 9,346,655 2,794,902 54,384 44,645 277,228 54,217 59,759 15,931 16,405
--------- --------- ------- ------ --------- ------- --------- ------- -------
--------- --------- ------- ------ --------- ------- --------- ------- -------
DUE BCBSUW 8,272,641 181 1,244,790 58,729 208,467 356,345 217,644
DUE UWSI SUBSIDIARY 301,068
- ----------------------------------------------------------------------------------------------------------------------------------
MANAGED UNITED
VALLEY MERIDIAN CARE UWG UOT UWSI MMS HEARTLAND UNITY TOTAL
DOLLARS DOLLARS DOLLARS DOLLARS DOLLARS DOLLARS DOLLARS DOLLARS DOLLARS DOLLARS
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
CHSIC
FINANCE 91,149 70,568 70,568 0 0 0 1,405 0 0 3,974,864
MARKETING 0 0 0 5,231 0 0 0 0 0 1,419,756
OPERATIONS 1,766 0 7,949 0 0 0 4,010 0 1,766 6,322,403
UNALLOCATED 0 0 0 0 0 0 175 0 0 1,072,443
TOTAL CHSIC 92,915 70,568 78,517 5,231 0 0 5,590 0 1,766 12,789,466
------- --------- --------- --------- ------- --------- --------- ------- --------- ----------
------- --------- --------- --------- ------- --------- --------- ------- --------- ----------
TOTAL DENTACARE 0 121,512 0 0 0 0 0 0 0 994,917
------- --------- --------- --------- ------- --------- --------- ------- --------- ----------
------- --------- --------- --------- ------- --------- --------- ------- --------- ----------
TOTAL RIGHT Rx CHARGE 18,210 0 3,214 765,888
TOTAL RxCEL CHARGE 79,678
MERIDIAN
PRESIDENT
PRESIDENT 300 3,756,194 237,471 750 0 0 0 525 300 4,005,672
RECOVERY 0 77,125 0 0 14,203 0 203,148 0 0 1,614,517
TOTAL MERIDIAN 300 3,833,319 237,471 750 14,203 0 203,148 525 300 5,620,189
MERIDIAN MRKT SRVS
VP 0 0 0 0 0 0 4,930 0 0 4,930
SPEC MKTS PROJECT 0 0 0 28,423 7,742 0 3,953,764 0 0 4,090,949
TELEMARKETING 0 0 0 71,414 0 0 1,367,830 0 0 1,439,244
OPERATIONS 0 0 0 46,620 0 0 2,035,375 0 0 2,711,346
TOTAL MERIDIAN MRKT SRVS 0 0 0 146,457 7,742 0 7,361,899 0 0 8,246,469
MANAGED CARE
MEDICAL DIRECTOR 19,565 7,063 175,522 0 0 0 19,565 0 19,565 744,466
D M AND R 0 42,248 356,200 0 0 0 13,925 0 0 772,618
ASST MEDICAL DIREC 0 20,191 591,017 15,162 2,958 0 880 1,083 0 1,022,424
------- --------- --------- --------- ------- --------- --------- ------- --------- ----------
TOTAL MANAGED CARE 19,565 69,502 1,122,739 15,162 2,958 0 34,370 1,083 19,565 2,539,508
UWSI
PRESIDENT 164,161 206,498 437,771 683,923 17,344 437,472 527,715 345,791 178,816 9,164,562
LEGAL 10,152 7,709 38,317 467,294 7,613 299,570 50,919 17,853 101,549 2,541,218
FINANCE 208,701 176,223 278,342 746,561 90,784 396,644 682,068 263,746 91,310 7,771,185
OTHER 1,206 8,241 46,833 0 201 0 4,422 18,090 0 201,000
TOTAL UWSI 384,220 398,671 801,263 1,897,778 115,942 1,133,686 1,265,124 645,480 371,675 19,677,965
------- --------- --------- --------- ------- --------- --------- ------- --------- ----------
------- --------- --------- --------- ------- --------- --------- ------- --------- ----------
DUE BCBSUW 350,394 561,464 582,425 5,723,036 96,119 1,165,527
DUE UWSI SUBSIDIARY 833,534 517,851 9,340,415