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EXHIBIT 10.20
MANAGEMENT SERVICES AGREEMENT
This MANAGEMENT SERVICES AGREEMENT (this "Agreement") is made and
entered into as of this __ day of ________, 1998, by and between NEW CENTURY
HEALTH QUALITY ALLIANCE, INC., a Kansas nonprofit corporation ("IPA"), and
KANSAS CITY PHYSICIAN MANAGEMENT, L.L.C., a Tennessee limited liability company
("Manager").
WITNESSETH
WHEREAS, IPA is an independent practice association of physicians and
physician practice groups organized to engage in managed care contracting with
insurance companies, health maintenance organizations, employer self-funded
plans, health plans, and other managed care organizations; and
WHEREAS, IPA desires to retain the services of Manager in connection
with selected business and administrative functions of its physician network,
including but not limited to, negotiating with managed care organizations with
respect to the delivery of health care services to the subscribers or
beneficiaries of health care plans, so as to permit physicians participating in
its network to devote their efforts on a concentrated and continuous basis to
the rendering of Medical Services to patients.
NOW THEREFORE, in consideration of the foregoing and the mutual
agreements and covenants contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby forever
acknowledged and confessed. IPA agrees to purchase the business management
services of Manager and to appoint Manager as its agent to negotiate with
managed care organizations on its behalf as described herein, and Manager agrees
to provide such services and accepts its appointment as agent on the terms and
conditions provided in this Agreement.
ARTICLE I
DEFINITIONS
As used in this Agreement, each of the following terms shall have the
meaning set forth below:
"AFFILIATE" shall mean (i) any officer, director or partner of North
American Medical Management -- Kansas City, Inc. ("NAMM"); (ii) any person,
corporation, partnership, trust or other entity controlling, controlled by or
under common control of NAMM, or any person described in (i) above; (iii) any
officer, director, shareholder or general partner of any person described in
(ii) above; and (iv) any person who is a member, other than as a limited
partner, with any person described in (i) and (ii) above in a relationship of
joint venture, general partnership or similar form of unincorporated business
association; provided, however, that an unaffiliated partner in a
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partnership or joint venture with (a) the Partnership or (b) an affiliate of
NAMM shall not by virtue of such relationship be deemed an Affiliate of Manager.
For purposes of this definition, the term "control" shall also mean the control
or ownership of 10% or more of the outstanding voting securities of the entity
referred to.
"BENEFICIARY" shall mean any eligible individual who is covered under a
Benefit Agreement offered by a Payor and entitled to receive the Covered
Services pursuant to such Benefit Agreement.
"BENEFIT AGREEMENT" shall mean the contract that establishes a Payor's
obligation to the Beneficiary for the payment of medical, hospital or other
health care benefits.
"COVERED SERVICES" shall mean those Medical Services enumerated in
Payor Contracts which Participating Physicians are obligated to provide to
Beneficiaries.
"INSTITUTIONAL FUND" shall mean that account which is established by
IPA for (i) the collection of all contract revenues or earnings attributable to
Institutional Services and the disbursement of all costs and expenses in
connection with the provision of Institutional Services, and (ii) the
maintenance of appropriate Reserves related to the provision of Institutional
Services.
"INSTITUTIONAL SERVICES" shall mean all services which are not
Professional Services, including, without limitation, accommodations and use of
facility; nursing, technician and related services; pharmacy services; drugs
biologicals, supplies, appliances and equipment; diagnostic or therapeutic items
or services; administrative services and housekeeping; durable medical equipment
and home health services. Those services which constitute Institutional Services
may be specifically set forth in a contract between IPA and a payer, in which
case the provisions of such contract shall control and supersede the definition
of Institutional Services contained herein.
"IPA EXPENSES" shall mean all reasonable expenses of IPA which are not
covered by this Agreement, including but not limited to, (i) expenses for
director and officer liability insurance, professional liability insurance,
reinsurance premiums and other insurance, (ii) travel and education expenses
incurred by IPA members on matters related to the management or administration
of the IPA, (iii) marketing and advertising expenses over and above budgeted
amounts, (iv) officer stipends, including fees paid to medical directors and
other medical consultants, (v) director stipends for meeting attendance, (vi)
optional programs and specialized services focused on physician offices,
including non routine software enhancements, and (vii) legal, auditing and
financial review and other professional fees of IPA related to IPA's review of
Manager's books and records.
"IPA SURPLUS" shall mean for any period, the positive balance in the
Professional Fund for the period, if any, plus the positive balance in the
Institutional Fund for the period, if any, plus any other revenues of IPA, the
pre-tax income of IPA, which shall be calculated as the revenues of the IPA from
all sources minus the expenses of operating the business of the IPA, which
expenses shall include all Medical Expenses, the IPA Expenses, and the Manager
service fee described in Section 7.2(a).
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"MANAGER EXPENSES" shall mean all reasonable expenses which are
incurred by Manager or its agents in connection with the performance of its
duties under this Agreement, including but not limited to, (i) Executive
Director salary and fees, (ii) salaries, benefits and other direct costs of
Manager employees, (iii) obligations of Manager under leases or subleases
entered into in connection with the performance of services hereunder, (iv)
federal and state income, personal property and intangible taxes assessed
against Manager, (v) general liability and insurance expenses of Manager (vi)
costs of routine computer hardware and software licenses currently used by
Manager in performing its services as well as routine enhancements and upgrades,
and (vii) other expenses incurred by Manager in carrying out its obligations
under this Agreement.
"MEDICAL SERVICES" shall mean general medical, specialty and other
health care services provided by Participating Physicians and other professional
personnel, including, without limitation, employees and independent contracts,
pursuant to contracts between IPA and Payors.
"OUTCOMES MEASUREMENT PROGRAM" shall mean either the outcomes
measurement a program developed, established and administered by IPA or its
agents for outcomes measurement activities, or a similar program developed,
established and administered by a Payor.
"PARTICIPATING PHYSICIANS" shall mean the physicians licensed to
practice medicine in the States of Kansas and/or Missouri who have entered into
a Participation Agreement with IPA.
"PARTICIPATION AGREEMENTS" shall mean the Participation Agreements by
and between IPA and its Participating Physicians or other Providers pursuant to
which the Participating Physicians or Providers agree to provide Covered
Services to Beneficiaries under Payor Contracts entered into by IPA.
"PAYOR" shall mean any entity having a current valid Payor Contract
with IPA and which pays, indemnifies or makes payments on behalf of
Beneficiaries for medical and hospital costs. This definition includes but is
not limited to, insurance companies, health maintenance organizations, managed
care organizations, preferred provider organizations, Medicare and Medicaid,
third party administrators, a partially or fully self-insured employer, a
multiple employer trust or an employee welfare benefit plan and the clients of
any of the preceding entities.
"PAYOR CONTRACT" shall mean an agreement between IPA and a Payor
pursuant to which IPA agrees on behalf of the Participating Physicians that its
Participating Physicians will render Covered Services to Beneficiaries through
the Participating Physicians at amounts determined and established in such
agreement. Unless the IPA and Manager mutually agree on a method by which
Manager shall administer and be compensated for non-capitated Payor Contracts,
Payor Contracts as used in this Agreement shall include only those agreements
for which payment is made to the IPA on a capitation basis in which capitation
is made to IPA for a broad range of Medical Services.
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"PROFESSIONAL FUND" shall mean that account which is established by IPA
for (i) the collection of all contract revenues and earnings attributable to
Professional Services and the disbursement of all costs and expenses in
connection with the provision of Professional Services, including, without
limitation, payments to physicians under any Participation Agreement, and (ii)
the maintenance of appropriate Reserves related to the provision of Professional
Services.
"PROFESSIONAL SERVICES" shall mean those professional services which
are provided by a licensed physician rendered directly to the patient, including
diagnosis, therapy, surgery and consultation. Those services that constitute
Professional Services may be specifically set forth in a contract between IPA
and a Payer, in which case the provisions of such contract shall control and
supersede the definition of Professional Services contained herein.
"PROVIDER" shall mean any physician, group medical practice, hospital
or other health care provider which is a participating provider of a Payor with
which IPA contracts.
"RESERVES" shall mean, with respect to any period, the amount of funds
set aside for, or amounts allocated during such period for the purpose of
funding reserves for actual or contingent liabilities (including reserves for
claims reported and claims incurred but not reported), or other costs or
expenses incident to the payment for or provision of Professional Services or
Institutional Services under Payer Contracts or otherwise deemed by the IPA
governing board, with the approval of Manager, necessary to meet the current or
anticipated future needs of the IPA.
"SERVICE AREA" shall mean Johnson and Wyandotte counties in the State
of Kansas.
"UTILIZATION MANAGEMENT PROGRAM" shall mean (i) the utilization
management program developed, established and administered by IPA or its agents
for the determination of the medical necessity of Medical Services provided to
Beneficiaries, (ii) a utilization management program developed by a Payor and
administered by IPA, or (iii) a utilization management program developed,
established and administered by a Payor.
ARTICLE II
GENERAL
2.1 RETENTION OF MANAGER. IPA hereby retains Manager for the
purpose of rendering all business management and support services specified in
Article III hereof and for the purpose of facilitating the negotiation and
execution of contracts with Payors on behalf of IPA in accordance with the
provisions of Article IV hereof, and Manager accepts such retention, subject at
all times to the provisions of this Agreement.
2.2 ENGAGEMENT TERMS. IPA retains Manager as its sole and
exclusive management services provider. IPA acknowledges that Manager will
provide its services hereunder directly or may assign any and all of its
obligations hereunder to other third party assignees or subcontractors as agreed
upon by IPA and Manager, such consent by IPA not to be unreasonably withheld. In
the event Manager desires to assign any or all of its obligations hereunder to
another PhyCor, Inc. affiliate, IPA acknowledges that its consent will not be
required. Manager shall provide such
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management services and/or health care contract negotiation or agency services
to IPA and its Participating Physicians as IPA may reasonably request. Manager
is expressly authorized to provide such services in any reasonable manner
Manager deems appropriate to meet the day-to-day requirements of the business
functions of IPA and IPA's provision of Covered Services to Beneficiaries. To
the extent it deems appropriate, Manager may perform such business office
services for IPA at locations of Manager's choosing. Manager and its assignees
may also provide management services to group medical practices and health care
providers or to other managed care organizations with the prior consent of IPA,
which shall not be unreasonably withheld and which shall be provided or denied
in writing by IPA within thirty (30) days of receipt of such request by Manager.
IPA acknowledges that Manager and its assignees may provide management services
to IPA and to such other groups or entities through common management
information systems, employees and other resources. IPA acknowledges that
Manager may acquire and manage medical group practices in the Service Area.
2.3 NEW SERVICES/LOCATIONS. Manager, at its option, shall have the
exclusive right to provide additional or new business management and other
services necessary to support IPA; provided that IPA determines that it needs or
desires such other services. Should Manager decline to provide the new or
additional services, IPA may perform or purchase such services from others at
its own expense.
2.4 MEETINGS. IPA shall notify Manager in writing and shall
provide Manager or its assignees the opportunity to be present and heard at all
meetings of the IPA governing body or meetings of the IPA's senior officers
except those meetings or portions of meetings concerning Manager. Without the
written consent of Manager or its assignee, IPA shall not conduct meetings with
payors.
ARTICLE III
SERVICES
3.1 PERFORMANCE OF MANAGEMENT FUNCTIONS. Manager may provide or
arrange for others to provide the services called for by this Agreement. Manager
is hereby expressly authorized to perform its services hereunder in whatever
manner it deems reasonably appropriate to meet the day-to-day requirements of
IPA operations in accordance with the general standards approved by the
governing body of IPA, including, without limitation, performance of some of the
business office functions at locations other than the office of IPA. IPA will
not act in a manner that would prevent Manager from efficiently managing the
day-to-day operations of IPA in a business-like manner.
3.2 FINANCIAL PLANNING AND GOALS. Manager shall prepare annual
capital and operating budgets reflecting in reasonable detail anticipated
revenues and expenses and sources and uses of capital for the development and
conduct of IPA's activities. Said budget shall be presented to the governing
board of IPA at least sixty (60) days prior to the commencement of each fiscal
year of IPA. Manager will monitor the performance of Participating Physicians,
including certain key physicians, physician organized delivery systems ("PODS")
and the overall performance of
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IPA and will make annual recommendations on the bonus distributions to be paid
to key physicians from IPA Surplus, as applicable.
3.3 AUDITS AND STATEMENTS. Manager shall prepare financial
statements reflecting the operations of IPA on a monthly basis and PODS
performance reports on a quarterly basis or at such other frequency as Manager
and IPA mutually determine to be reasonable. If IPA desires an audit of these
financial statements, it may obtain such audit as an IPA Expense.
3.4 ACCESS. Upon reasonable notice to Manager and without
disruption to normal business activities, IPA's senior officers, members of
IPA's governing body, or agents appointed by either shall have the right during
normal business hours to audit, examine, and make copies of books of account
maintained by Manager with respect to the provision of Covered Services and
Manager's billings and collections on IPA's behalf.
3.5 NON-MEDICAL MANAGEMENT AND ADMINISTRATIVE SERVICES.
(a) IPA hereby appoints Manager as its sole and exclusive
manager and administrator of all day-to-day business functions for IPA's risk
contract business. IPA agrees that the purpose and intent of this Agreement is
to relieve its Participating Physicians and other Providers, to the maximum
extent possible, of the administrative, accounting, personnel and business
aspects of IPA, with Manager assuming responsibility and being given all
necessary authority to perform these functions. Manager's specific
responsibilities shall include without limitation: (i) maintaining open
communications with IPA, PODS leaders and such other key physicians as
identified by IPA; (ii) appraising IPA, PODS leaders and key physicians of
central business issues; providing on-site office staff education and training
as requested by IPA; (iii) providing staffing and administrative assistance at
all IPA board and PODS leadership meetings to transcribe meeting minutes and
provide input as appropriate; (iv) assisting IPA in providing prompt review and
response to patient or provider grievances, inpatient reviews, ambulatory
referral reviews, discharge planning, other administrative functions to support
the utilization review process and review and updates of Physician handbooks;
(v) providing actuarial consulting services for purposes of estimating IPA's
reserves and incurred but not reported ("IBNR") claims, including physician
compensation and capitation budget development; and (vi) such other assistance
as agreed to by the parties to support IPA's obligations to Participating
Providers as set forth in certain Participation Agreements and IPA's Policies,
Rules and Regulations. Manager and IPA agree that only Participating Physicians
and Providers will perform the medical functions and provide Medical Services
through IPA. Manager will have no authority, directly or indirectly, to perform,
and will not perform, any medical function. Manager may, however, advise IPA as
to the relationship between its performance of medical functions and the overall
administrative and business functioning of IPA. The parties acknowledge and
agree that IPA, through its governing body and Participating Physicians and
Providers, and not Manager, shall be responsible and liable for and shall have
complete authority, supervision, and control over the provision of all Medical
Services performed for patients and that all diagnoses, treatments and
procedures related to Medical Services shall be provided and performed under the
supervision of Physicians or other appropriately licensed professionals, as such
professionals, in their sole discretion, deem appropriate.
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(b) Manager shall, on behalf of IPA, bill and collect
professional fees for Medical Services rendered by Participating Physicians of
IPA to the extent permitted under the applicable Payor Contract, and bill and
collect from managed care organizations for professional fees for Medical
Services rendered or to be rendered by Participating Physicians to Beneficiaries
which are to be paid for by the managed care organization. IPA hereby appoints
Manager for the term hereof to be its true and lawful attorney-in-fact, for the
following purposes: (i) to bill managed care organizations in IPA's name and on
its behalf; (ii) to collect accounts receivable resulting from such billing in
IPA's name and on its behalf; (iii) to receive payments from Payors, including
prepayments received from health care plans, Medicare, Medicaid and all other
third-party payors or managed care organizations; (iv) to take possession of and
endorse in the name of IPA (and/or in the name of an individual physician, such
payment intended for purpose of payment of a physician's bill) any notes,
checks, money orders, insurance payments and other instruments received in
payment of accounts receivable; (v) to determine, based on criteria set by IPA,
which claims for payment from Participating Physicians are appropriate and to
pay such claims on a prompt basis, including fee for service and capitation
payments due Participating Physicians pursuant to the Participation Agreement
and to make prompt payment within thirty days of properly submitted "clean"
claims presented for payment by any other providers who are to be paid by IPA,
and (vi) with IPA's prior written consent, to initiate the institution of legal
proceedings in the name of IPA to collect any accounts and monies owed to the
IPA, to enforce the rights of IPA as creditors under any contract or in
connection with the rendering of any Covered Service, and to contest adjustments
and denials by governmental agencies (or their fiscal intermediaries). Manager
shall maintain a checking account in its own name for payroll purposes at a bank
mutually agreed to by Manager and IPA.
(c) Manager shall have procedures augmented in an IPA
Board approved banking resolution to permit Manager access to the IPA checking
account, which shall be established and maintained at a mutually acceptable
bank. In connection with the administration of funds under this Section and
throughout the term of this Agreement, IPA hereby grants Manager a special power
of attorney and appoints Manager as IPA's true and lawful agent and attorney-in
fact, and Manager hereby accepts such special power of attorney and appointment,
to deposit appropriate funds into the IPA account and to make withdrawals in
accordance with the banking resolution from the IPA account for payments
specified in this Agreement and as requested by IPA. Manager shall be obligated
to deposit any monies or other assets it receives for any reason on behalf of
IPA in the IPA account. Notwithstanding the special power of attorney granted to
Manager hereunder, IPA may continue to draw checks on the IPA account. Upon
request of Manager or the financial institution wherein the IPA account is
maintained, such additional documents or instruments as may be necessary to
evidence or effect the special power of attorney shall be granted to Manager by
IPA.
(d) Manager shall design, supervise and maintain custody
of all files and records relating to the operation of IPA in a format suitable
for review by outside parties, including but not limited to accounting, billing,
contracts and leases, and collection records. IPA shall maintain routine
communications with IPA's chief financial officer and/or finance committee and
shall assist IPA in preparing reports for IPA's board in advance of each board
meeting. Patient
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medical records shall not be maintained by Manager and shall at all times be and
remain the property of IPA or its Participating Physicians or Providers and
shall be located at clinical facilities where they are readily accessible for
patient care. The management of all medical records shall comply with applicable
state and federal statutes. Manager shall use its best efforts to preserve the
confidentiality of patient medical records and use information contained in such
records only for the limited purposes necessary for performing the services set
forth herein; provided, however, in no event shall a breach of said
confidentiality requirement be deemed a default under this Agreement.
(e) Manager shall provide the data necessary for IPA to
prepare its annual income tax returns and shall assist IPA in the preparation
and filing of such returns. Manager, however, shall have no responsibility for
the preparation, filing, or protesting of IPA's federal or state income tax
returns or the payment of such income taxes.
3.6 NETWORK DEVELOPMENT AND PHYSICIAN RECRUITMENT. Manager shall
perform administrative services reasonably necessary and appropriate to develop
the IPA, such as advertising for and identifying potential candidates for
participation in the IPA network and arranging interviews. However, it will be
and remain the responsibility of IPA to interview, select, contract with,
supervise, compensate, control and terminate all physicians performing Covered
Services or other professional services, and Manager shall have no authority
whatsoever with respect to such activities.
3.7 CREDENTIALING. Manager shall assist IPA in implementing its
credentialing process, administering the credentialing and recredentialing
process implemented by IPA under its own standards or those required by any
Payor (including, but not limited to, obtaining information regarding licensure,
medical staff participation, insurance coverages and other information relevant
to credentialing standards of IPA or the Payors), arranging interviews and
reporting the results of the credentialing of each physician to the appropriate
committee or to the governing body of IPA; provided, however, that IPA shall
interview and make the ultimate decision as to the suitability and compliance
with credentialing and recredentialing standards of any physician to become
associated with IPA, and IPA shall be responsible for implementing the
appropriate credentialing standards and offering or denying a Participation
Agreement to a physician.
3.8 CLAIMS COLLECTION AND PAYMENT. On behalf and for account of
IPA, Manager shall establish and maintain credit and billing and collection
policies and procedures and shall bill and collect all professional and other
fees due from Payors for Covered Services provided by or on behalf of IPA.
Manager shall operate the claims collection and payment operations in such
manner as to ensure timely and accurate processing and payment of claims
consistent with IPA's Participation Agreements and Payor Contracts. Manager
shall advise and consult with IPA regarding the fees for Covered Services;
however, physician members of the IPA Board shall establish the fees to be
charged for Covered Services, and Manager shall have no authority whatsoever
with respect to the establishment of such fees. If contracts are negotiated by
Manager with a Payor which involve a pass through of physician fees with little
or no integration of activities or which put physicians at little risk for the
performance of other physicians, then Manager shall comply with all requirements
established from time to time by applicable federal or state antitrust
enforcement authorities
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regarding the permissible scope of activities of Manager as the agent messenger
in establishing and negotiating fees.
3.9 CASE MANAGEMENT SERVICES. Manager shall provide administrative
assistance to IPA in managing the provision of Covered Services to
Beneficiaries, including conferring with Participating Physicians regarding
compliance with Payor requirements regarding appropriate courses of treatment.
3.10 UTILIZATION MANAGEMENT, OUTCOMES MEASUREMENT AND QUALITY
IMPROVEMENT. Manager shall assist IPA in fulfilling its obligation under any
Utilization Management, Outcomes Measurement, or Quality Improvement programs
implemented by any Payor or by Manager. Such outcomes measurement and
utilization management function shall be carried out in accordance with the
requirements of the applicable Payor Contract and may include any requirements
or standards adopted by the governing body of IPA.
3.11 PRE-CERTIFICATION, REFERRAL PRE-CERTIFICATION SERVICES.
Manager shall assist IPA in establishing a system for verification of
Beneficiary eligibility and shall assist IPA in processing referral requests
from Participating Physicians in accordance with the requirements established in
the applicable Payor Contract or by the IPA. Manager shall assist the IPA in
reviewing each referral, based upon established medical criteria, to ensure that
the referral is appropriate under the applicable requirements regarding medical
necessity and utilization. Manager shall assist IPA in assuring that referral
authorizations are processed, routed to the appropriate specialty care provider,
or denied.
3.12 NEW SERVICES. Manager shall work with IPA to consider from
time to time whether it would be in the best interests of IPA for Manager to
make additional services available to IPA at its expense. If the parties
mutually agree on a new service, Manager shall make a good faith effort to
develop or acquire such services for IPA. Manager and IPA will together
establish fees for such services, taking into account the costs involved in
providing them.
3.13 COMPLIANCE WITH APPLICABLE LAWS. Manager shall comply with
all applicable federal, state and local laws, regulations and restrictions in
the conduct of its obligations under this Agreement.
ARTICLE IV
MANAGED CARE CONTRACTING
4.1 DELEGATION OF AUTHORITY TO NEGOTIATE. IPA hereby authorizes
Manager and appoints Manager as its attorney-in-fact to negotiate within the
parameters set by IPA and to recommend for IPA's execution, Payor Contracts on
behalf of IPA, including the details of capitation payment arrangements, in
accordance with criteria established from time to time by IPA. The negotiation
of fees with respect to any non-risk contracts that might be sought shall be
undertaken strictly in compliance with antitrust precautions. All Payor
Contracts shall be subject to approval by IPA in accordance with procedures
established by the governing body of the IPA.
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4.2 PAYOR CONTRACT PERFORMANCE. IPA shall provide or arrange for
Participating Physicians and other Providers to provide to Beneficiaries all of
the Covered Services under each Payor Contract entered into by Manager on
behalf of IPA in accordance with the terms of this Agreement, the Participation
Agreements and such Payor Contract. Manager's responsibilities shall include
without limitation, payment of provider capitation payments as provided in
Participation Agreements and prompt payment of clean claims presented to IPA for
payment by other Providers.
4.3 NEGOTIATION OF TERMS. Based on capitation rates and models,
fee schedules, and other information agreed to by IPA, Manager will enter into
negotiations with prospective Payors for the provision of Covered Services. If
the terms of any proposed Payor Contract differ from the scope of Covered
Services or compensation arrangements specified by IPA or its Participating
Physicians, Manager will review with the IPA the proposed terms of such
contract.
4.4 ADDITIONAL SERVICES. Manager may provide additional managed
care contracting services to IPA in accordance with terms and subject to
compensation arrangements agreed to by the parties.
ARTICLE V
AGREEMENTS AND RESPONSIBILITIES OF IPA
5.1 LICENSES. It shall be the duty of IPA to assure that each of
IPA's Participating Physicians and other Providers are licensed without
restriction in the state in which IPA will arrange for the Covered Services
under Payor Contracts and maintain such licensure during the term of this
Agreement. IPA shall comply with its established policies and procedures for
ensuring its Participating Physicians and other Providers and shall cause its
Participating Physicians to comply with all applicable federal, state and local
laws, regulations and restrictions in the conduct of its obligations under this
Agreement and with all legal requirements relating to the furnishing of Covered
Services and other Medical Services to the public and will obtain and maintain,
and shall cause each of its Participating Physicians and other Providers to
obtain and maintain in effect, all permits, licenses, and governmental or board
approvals which may be necessary for that purpose.
5.2 MEDICAL PRACTICE. It shall be the duty of IPA to assure that
each of IPA's Participating Physicians and other Providers render Medical
Services in a manner which assures availability, adequacy and continuity of care
to Beneficiaries, during and after the term of this Agreement and each
applicable Payor Contract. Such Participating Physicians and other Providers are
to retain sole control of their medical practices and maintain the
physician-patient relationship, both in accordance with the best medical
judgment and discretion of the Participating Physicians. The Participating
Physicians and other Providers must remain solely responsible for the quality of
Medical Services provided, must render such services in accordance with
generally accepted medical practice and professionally recognized standards, and
must exercise independent medical judgment and have full authority over all
Covered Services and all clinical decisions pertaining to the delivery of
Covered Services.
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5.3 UTILIZATION MANAGEMENT, OUTCOMES MEASUREMENT AND QUALITY
IMPROVEMENT. IPA shall adopt and monitor the implementation of Utilization
Management, Outcomes Measurement and Quality Improvement Programs designed to
monitor and evaluate the quality of Covered Services provided by Participating
Physicians and other Providers and to evaluate the professional skills of
potential participating providers (including, without limitation, determining
whether each such provider may provide Covered Services and the scope and
conditions of such privileges) prior to permitting such persons to provide
Covered Services. Manager shall provide administrative services to IPA in
performing these programs.
5.4 ACCESS TO BOOKS AND RECORDS. At all times during the term of
this Agreement, IPA shall permit Manager to have access to all of IPA's books,
records and reports, contracts, agreements, licenses, survey, accreditations and
any and all other information reasonably requested by Manager to perform its
duties under this Agreement.
5.5 DELIVERY OF RECEIPTS. In the event IPA receives any funds due
IPA pursuant to a Payor Contract, IPA shall immediately deliver such funds to
Manager for deposit to the proper IPA bank account and for use on behalf of IPA
by Manager.
ARTICLE VI
INSURANCE AND INDEMNIFICATION
6.1 INSURANCE.
(a) Participating Physician Insurance Coverage. It shall
be the duty of IPA to implement policies and procedures to assure that each
Participating Physician and Provider has obtained and continues to maintain
throughout the term of this Agreement, at such Physician's or Provider's cost
and expense, a policy of general liability insurance with such coverages and
with such limits as shall be mutually satisfactory to IPA and Manager. In
addition, IPA shall cause each Participating Physician and other Provider to
carry professional liability insurance with limits of at least one million
dollars ($1,000,000) per occurrence and at least three million dollars
($3,000,000) in the annual aggregate or, if greater, such amounts as are
required by the Payor Contracts or such other limits as required by state law.
IPA agrees to provide to Manager appropriate certificates or other evidence of
such general and professional liability insurance coverages. Through its
agreements with Participating Physicians, IPA shall require that for a period of
four years after termination of such agreements, any Physician whose
professional liability insurance coverage is through a claims made policy shall
either purchase tail coverage for such period or else remain in the practice of
medicine and be covered by a claims made policy with limits equal to or greater
than those set forth above.
(b) IPA Insurance. IPA shall purchase managed healthcare
professional liability insurance in an amount appropriate to the liability risk
assumed by IPA, with limits of at least $1,000,000 per occurrence and $3,000,000
in the annual aggregate.
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(c) Manager Insurance. Manager shall, at its cost,
purchase errors and omissions liability insurance in an amount appropriate to
the liability risk assumed by Manager and its Affiliates, with limits of at
least $5,000,000 in the annual aggregate.
6.2 RECORDS. IPA shall maintain records and procedures as may be
required to account accurately for all Covered Services and other Medical
Services provided pursuant to this Agreement. Such records shall be kept in
accordance with generally accepted accounting principles, consistently applied,
and recognized standards of professional practice.
6.3 INDEMNIFICATION.
(a) IPA Indemnification. IPA shall indemnify, hold
harmless and defend Manager, its officers, directors, employees, agents,
successors and assigns, from and against any liability, loss, damage, claim,
cause of action, cost or expense, including reasonable attorneys' fees, caused
or asserted to have been caused, directly or indirectly, by or as a result of
the performance of Covered Services or other Medical Services or any other acts
or omissions by IPA or its Participating Physicians or other Providers during
the term hereof.
(b) Manager Indemnification. Manager shall indemnify,
hold harmless and defend IPA, its officers, directors, employees, agents,
successors and assigns, from and against any liability, loss, damage, claim,
cause of action, cost or expense, including reasonable attorneys' fees, caused
or asserted to have been caused, directly or indirectly, by or as a result of
the performance of its duties and responsibilities hereunder or other
administrative services contemplated herein or any other acts or omissions by
Manager or its Subcontractor during the term hereof.
ARTICLE VII
COMPENSATION TO MANAGER
7.1 BASIS OF SERVICE FEE. IPA and Manager mutually recognize and
acknowledge that Manager will incur substantial costs on behalf of IPA, defined
herein as Manager Expenses, in providing support services, personnel, marketing,
management, administration and other items and services at are the subject
matter of this Agreement and in connection with the creation and use of systems
and administrative programs. IPA and Manager further recognize that certain of
such costs and expenses can vary to a considerable degree. Furthermore, IPA and
Manager agree that it will be impracticable to ascertain and segregate the exact
costs and expenses that will be incurred by Manager from time to time in
performance of its obligations under this Agreement. Therefore the parties agree
to the following fee arrangement.
7.2 SERVICES FEES
(a) Fixed Component Service Fee. IPA shall pay Manager
the at-cost service fees set forth in Exhibit A, which per member per month fees
shall vary by character of the Payor Contracts managed (whether commercial,
Medicaid or Medicare), the volume of enrollees, and whether hospital full risk
funds are also managed. Commencing January 1, 2000, and each January
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1st thereafter, the fee for commercial beneficiaries shall be increased by the
percentage increase, if any, which has occurred in the Consumer Price Index for
the Kansas City Metropolitan Service Area during the prior calendar year;
provided, however, the fee increase shall not exceed 3% in any one year.
(b) Incentive Fee. From time to time the IPA is expected
to accumulate an IPA Surplus. When Manager and IPA mutually determine, on a
quarterly basis, that sufficient funds are available to met IPA contingencies,
including an amount for reasonable reserves, and cash flow needs, Manager may
make available to IPA for distribution, fifty percent (50%) of such IPA Surplus
and may distribute fifty percent (50%) to itself as the incentive component of
its management service fee.
7.3 IPA EXPENSES. IPA shall be responsible for bearing the
cost of the items identified as IPA Expenses, and Manager shall have no
liability therefor.
7.4 MANAGER EXPENSES. Manager shall be responsible for bearing
the cost of the items identified as Manager Expenses, and IPA shall have no
liability therefor.
7.5 MANAGEMENT SERVICES SUBCONTRACT BETWEEN MANAGER AND
SUBCONTRACTOR. IPA acknowledges that Manager has entered into a separate
Subcontract with North American Medical Management -- Kansas City, Inc.
("Subcontractor"), pursuant to which Manager has engaged Subcontractor to
perform the management services which Manager has agreed to provide to IPA
hereunder.
ARTICLE VIII
TERM AND TERMINATION
8.1 TERM OF AGREEMENT. This Agreement shall commence on the date
first set forth above, and shall expire on the tenth (10th) anniversary of such
date unless extended or earlier terminated pursuant to the terms hereof.
8.2 EXTENDED TERM. Unless earlier terminated as provided for in
this Agreement, the term of this Agreement shall be extended automatically for
additional terms of five (5) years each, unless either party delivers to the
other party, not less than six (6) months prior to the expiration of the then
current term, written notice of such party's intention not to extend the term of
this Agreement.
8.3 BANKRUPTCY AND INSOLVENCY. This Agreement shall terminate, at
the option of the other party, upon the filing of a petition in voluntary
bankruptcy or an assignment for the benefit of creditors by a party, or upon
other action taken or suffered, voluntarily or involuntarily, under any federal
or state law for the benefit of insolvents by a party, except for the filing of
a petition in involuntary bankruptcy against a party with the dismissal thereof
within thirty (30) days thereafter.
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8.4 FAILURE OF PERFORMANCE. If Manager substantially fails to
perform any material duty or obligation imposed upon it by this Agreement
including, but not limited to, those obligations set forth on Exhibit B, and
such default shall continue for a period of ninety (90) days after written
notice thereof specifying the nature of the default has been given to Manager by
IPA, IPA may terminate this Agreement upon sixty (60) days prior written notice
and seek relief or any other damages caused by Manager. If IPA substantially
fails to perform any material duty or obligation imposed upon it by this
Agreement, and such default shall continue for a period of ninety (90) days
after written notice thereof specifying the nature of the default has been given
to IPA by Manager, Manager may terminate this Agreement upon sixty (60) days
prior written notice and seek relief or any other damages caused by IPA.
8.5 TERMINATION BY AGREEMENT. In the event IPA and Manager shall
mutually agree in writing, this Agreement may be terminated on the date
specified in such written agreement.
8.6 EFFECT OF TERMINATION. Upon termination of this Agreement,
neither party shall have any further obligations hereunder, except for (i)
obligations accruing prior to the effective date of termination, and (ii)
obligations, promises or covenants set forth herein that are expressly made to
survive termination of this Agreement.
ARTICLE IX
GENERAL PROVISIONS
9.1 NON-SOLICITATION. IPA agrees that for the term of this
Agreement or in the event of termination, for a period of three (3) years
thereafter, it shall not directly or indirectly hire or solicit, or attempt to
hire or solicit, an employee of Manager or its assignees or successors, or
request or induce, or attempt to request or induce, a then employee of Manager
or its assignees or successors, to terminate his or her employment and accept
employment with another entity.
9.2 OWNERSHIP OF SYSTEMS AND INFORMATION. IPA hereby acknowledges
that the management information system to be used by Manager or its assignees in
the performance of the obligations hereunder is and shall remain the exclusive
property of Manager or its assignees. Other than the medical records, which
shall remain at all times the property of the Participating Physicians and any
raw data and reports attributable to IPA Beneficiaries, all records, files,
memoranda, outcomes data and all information and prepared by Manager or its
assignees in the performance of its obligations hereunder, shall be and remain
the property of Manager. Upon termination of this Agreement, IPA shall promptly
return to Manager or its assignees, all such materials in its possession and
shall not thereafter remove or cause removal thereof from the premises of
Manager or its assignees.
9.3 ASSIGNMENT. Manager shall have the right to assign its rights
and obligations hereunder to any affiliate of Manager and Manager may contract
with other entities in order to meet any and all of its obligations under this
Agreement. Manager shall have the right to assign its rights hereunder to any
lending institution, for security purposes or as collateral, from which Manager
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obtains financing. IPA shall not have the right to assign its rights or
obligations hereunder without the written consent of Manager which consent will
not be unreasonably withheld.
9.4 WHOLE AGREEMENT; MODIFICATION. This Agreement constitutes the
entire agreement of the parties with respect to the subject matter hereof and
supersedes all prior agreements between the parties. There are no other
agreements or understandings, written or oral, between the parties regarding
this Agreement other than as set forth herein. This Agreement shall not be
modified or amended except by a written document executed by both parties to
this Agreement, and such written modifications shall be attached hereto.
9.5 NOTICES. All notices required or permitted by this Agreement
shall be in writing and shall be addressed as follows:
TO IPA: New Century Health Quality Alliance, Inc.
10550 Quivera, Suite 12 D
Overland Park, KS 66215
Attn: President
TO MANAGER: Kansas City Physician Management, L.L.C.
30 Burton Hills Blvd., Suite 400
Nashville, TN 37215
Attn: President
WITH A COPY TO: North American Medical Management, Inc.
30 Burton Hills Boulevard
Suite 400
Nashville, TN 37215
Attn: General Counsel
or to such other address as either party shall notify the other in writing.
9.6 BINDING ON SUCCESSORS. This Agreement shall be binding upon
the parties hereto, and their respective successors and assigns, if any. It is
not the intention of IPA or Manager that Payors or Beneficiaries shall be third
party beneficiaries of the obligations of either party to this Agreement, and no
such Payors and Beneficiaries shall have the right to enforce any such
obligations.
9.7 WAIVER OF PROVISIONS. Any waiver of any terms and conditions
hereof must be in writing, and signed by the parties hereto. The waiver of any
of the terms and conditions of this Agreement shall not be construed as a waiver
of any subsequent breach of the same or any other terms and conditions hereof.
9.8 GOVERNING LAW. The validity, interpretation and performance
of this Agreement shall be governed by and construed in accordance with the laws
of the State of Tennessee. The parties acknowledge that Manager is not
authorized or qualified to engage in any activity which
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may be construed or deemed to constitute the practice of medicine. To the extent
any act or service required of Manager in this Agreement should be construed or
deemed, by any governmental authority, agency or court to constitute the
practice of medicine, the performance of said act or service by Manager shall be
deemed waived and forever unenforceable.
9.9 SEVERABILITY. The provisions of this Agreement shall be
deemed severable, and if any portion shall be held invalid, illegal or
unenforceable for any reason, the remainder of this Agreement shall be effective
and binding upon the parties provided that the substance of the economic
relationship created by this Agreement remains materially unchanged.
9.10 ADDITIONAL DOCUMENTS. Each of the parties hereto agrees to
execute any document or documents that may be requested from time to time by the
other party to implement or complete such party's obligations pursuant to this
Agreement.
9.11 ATTORNEYS' FEES. If legal action is commenced by either party
to enforce or defend its rights under this Agreement, the prevailing party in
such action shall be entitled to recover its costs and reasonable attorneys'
fees in addition to any other relief granted.
9.12 CONFIDENTIALITY. Except for disclosure to its attorneys,
bankers, underwriters or lenders, or as necessary or desirable for the conduct
of business, including negotiations with acquisition candidates, neither party
hereto shall disseminate or release to any third party or use for the benefit of
any person or entity, any information regarding any provision of this Agreement,
or any financial information regarding the other (past, present or future) that
was obtained by the other in the course of the negotiations of this Agreement or
in the course of the performance of this Agreement without the other party's
written approval. Provided, however, the foregoing shall not apply to
information which (i) is generally available to the public other than as a
result of a breach of confidentiality provisions; (ii) becomes available on a
non-confidential basis from a source other than the other party or its
affiliates or agents, which source was not itself bound by a confidentiality
agreement, or (iii) which is required to be disclosed by law or pursuant to
court order.
9.13 CONTRACT MODIFICATIONS FOR PROSPECTIVE LEGAL EVENTS. In the
event that any state or federal laws or regulations, now existing or enacted or
promulgated after the effective date of this Agreement, are interpreted by
judicial decision, a regulatory agency, or legal counsel expert in such matters
in a manner that indicates that the structure of this Agreement may be in
violation of such laws or regulations, IPA and Manager shall amend this
Agreement as necessary to assure compliance with legal requirements. To the
maximum extent possible, any such amendment shall preserve the underlying
economic and financial arrangements between IPA and Manager.
9.14 REMEDIES CUMULATIVE. No remedy set forth in this Agreement or
otherwise conferred upon or reserved to any party shall be considered exclusive
of any other remedy available to any party, but the same shall be distinct,
separate and cumulative and may be exercised from time to time as often as
occasion may arise or as may be deemed expedient.
9.15 COMMUNICATIONS. IPA and Manager agree that good communication
between the parties is essential to the successful performance of this
Agreement, and each pledges to
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communicate fully and clearly with the other and to cooperate in the provision
of the services to be provided hereunder. Further, the parties hereto agree to
deal with each other in good faith.
9.16 INDEPENDENT RELATIONSHIP. It is mutually understood and agreed
that IPA and Manager, in performing their respective duties and obligations
under this Agreement, are at all times acting and performing as independent
contractors with respect to each other, and nothing in this Agreement is
intended and nothing shall be construed to create an employer/employee,
partnership or joint venture relationship, or to allow Manager to exercise
control or direction over the manner or method by which the Participating
Physicians perform Covered Services or other professional health care services.
Manager shall be the agent of IPA solely to perform Manager's obligations set
forth in this Agreement that are related to the management of IPA's business and
not with respect to provision of Covered Services.
9.17 EVENTS EXCUSING PERFORMANCE. Manager and IPA shall not be
liable to the other party for failure to perform any of the services required
herein in the event of strikes, lock-outs, calamities or acts of God for so long
as such events continue, and for a reasonable period of time thereafter.
IN WITNESS WHEREOF, this Agreement is entered into and executed as of
the date first written above.
NEW CENTURY HEALTH QUALITY ALLIANCE, INC.
By: /s/
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Printed Name
Title: Chairman
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KANSAS CITY PHYSICIAN MANAGEMENT, L.L.C.
By: /s/
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Printed Name
Title:
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