EXHIBIT 10.26
CONTRACT WITH APPROVED ENTITY PURSUANT TO SECTIONS 1860D-1 THROUGH 1860D-42 OF
THE SOCIAL SECURITY ACT FOR THE OPERATION OF A VOLUNTARY MEDICARE PRESCRIPTION
DRUG PLAN
BETWEEN
CENTERS FOR MEDICARE & MEDICAID SERVICES (HEREINAFTER REFERRED TO AS "CMS")
AND
HEALTHSPRING, INC. AND
HEALTHSPRING OF ALABAMA, INC.,
separate legal entities which have contracted with each other to create a joint
enterprise (as described in Volume 70, Number 53, page 13397 of the Federal
Register) for the purposes of performing the obligations of this contract. The
joint enterprise is hereinafter referred to as the "PDP Sponsor." The separate
legal entities are hereinafter referred to as "members of the joint enterprise."
CMS and the PDP Sponsor, an entity that has been determined eligible to operate
a Voluntary Medicare Prescription Drug Plan by the Administrator of CMS under
423 CFR Section 423.503, agree to the following for the purposes of sections
1860D-1 through 1860D-42 (with the exceptions of sections 1860D-22(a) and
1860D-31) of the Social Security Act (hereinafter referred to as "the Act").
ARTICLE I.
MEDICARE VOLUNTARY PRESCRIPTION DRUG BENEFIT
A. PDP Sponsor agrees to operate one or more Medicare Voluntary Prescription
Drug Plans (hereinafter referred to as a "PDP"), as described in its
application and related materials, including but not limited to all the
attestations contained therein and all supplemental guidance, for Medicare
approval and in compliance with the provisions of this contract, which
incorporates in its entirety the Solicitation For Applications from
Prescription Drug Plans released on January 21, 2005 (as revised on March
9, 2005) (hereinafter collectively referred to as "the contract"). The PDP
Sponsor also agrees to operate in accordance with the regulations at 42 CFR
Section 423.1 through 42 CFR Section 423.910 (with the exception of
Subparts Q, R and S), sections 1860D-l through 1860D-42 (with the exception
of sections 1860D-22(a) and 1860D-31) of the Social Security Act, and the
solicitation, as well as all other applicable Federal statutes, regulations
and policies. This contract is deemed to incorporate any changes that are
required by statute to be implemented during the term of this contract and
any regulations or policies implementing or interpreting such statutory
provisions.
B. CMS agrees to perform its obligations to the PDP Sponsor consistent with
the regulations at 42 CFR Section 423.1 through 42 CFR Section 423.910
(with the exception of Subparts Q, R and S), sections 1860D-1 through
1860D-42 of the Social Security Act (with the exception of sections
1860D-22(a) and 1860D-31) and the solicitation, as well as all other
applicable Federal statutes, regulations and policies.
C. CMS agrees that it will not implement, other than at the beginning of a
calendar year, regulations under 42 CFR Part 423 that impose new,
significant regulatory requirements on the PDP Sponsor. This provision does
not apply to new requirements mandated by statute.
D. This contract is in no way intended to supersede or modify 42 CFR, Part
423. Failure to reference a regulatory requirement in this contract does
not affect the applicability of such requirements to the PDP Sponsor and
CMS.
ARTICLE II.
FUNCTIONS TO BE PERFORMED BY THE PDP SPONSOR
A. ENROLLMENT
1. PDP Sponsor agrees to accept new enrollments, make enrollments
effective, process voluntary disenrollments, and limit involuntary
disenrollments, as described in 42 CFR, Part 423, Subpart B.
2. PDP Sponsor agrees to comply with the prohibition in 42 CFR 423.104(b)
on discrimination in beneficiary enrollment.
B. PRESCRIPTION DRUG BENEFIT
1. PDP Sponsor agrees to provide the basic prescription drug coverage as
defined under 42 CFR Section 423.100 and, to the extent applicable,
supplemental benefits as defined in 42 CFR Section 423.100 and in
accordance with Subpart C of 42 CFR Part 423. PDP Sponsor also agrees
to provide Part D benefits as described in the PDP Sponsor's bid(s)
approved each year by CMS (as referenced in Attachment A, to be
replaced each year upon renewal of the contract to reflect the
Sponsor's approved bids for the succeeding contract year).
2. PDP Sponsor agrees to calculate and collect beneficiary premiums in
accordance with 42 CFR Sections 423.286 and 423.293.
C. DISSEMINATION OF PLAN INFORMATION
1. PDP Sponsor agrees to provide the information required in 42 CFR
Section 423.48.
2. PDP Sponsor agrees to disclose information to beneficiaries in the
manner and the form specified by CMS under 42 CFR Sections 423.128,
423.50 and in the "Marketing Materials Guidelines for Medicare
Advantage-Prescription Drug Plans (MA-PDs) and Prescription Drug Plans
(PDPs)," and to comply with requirements in 42 CFR Section 423.50
requiring certain approvals of marketing materials prior to
distribution.
3. PDP Sponsor certifies that all materials it submits to CMS under the
File and Use Certification authority described in the Marketing
Materials Guidelines are accurate, truthful, not misleading, and
consistent with CMS marketing guidelines.
D. QUALITY ASSURANCE/UTILIZATION MANAGEMENT
PDP Sponsor agrees to operate quality assurance, drug utilization
management, and medication therapy management programs, and to support
electronic prescribing in accordance with Subpart D of 42 CFR Part 423.
E. APPEALS AND GRIEVANCES
PDP Sponsor agrees to comply with all requirements in Subpart M of 42 CFR
Part 423 governing coverage determinations, grievances and appeals, and
formulary exceptions.
F. PAYMENT TO PDP SPONSOR
1. PDP Sponsor and CMS agree that payment under this contract will be
governed by the rules in Subpart G of 42 CFR Part 423.
2. If the PDP Sponsor is participating in the Part D Reinsurance Payment
Demonstration, described in 70 FR 9360 (Feb. 25, 2005) it affirms that
it will not
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seek payment under the demonstration for services provided to employer
group enrollees.
3. PDP Sponsor agrees that it is bound by all applicable federal laws and
regulations, guidance and authorities pertaining to claims and debt
collections. In the event that the government determines that the PDP
Sponsor has been overpaid, the PDP Sponsor agrees to return those
overpaid monies back to the federal government.
G. BID SUBMISSION AND REVIEW
If the PDP Sponsor intends to participate in the Part D program for the
next program year, PDP Sponsor agrees to submit the next year's bid,
including all required information on premiums, benefits and cost-sharing,
by the applicable due date, as provided in Subpart F of 42 CFR Part 423 so
that CMS and the Part D plan sponsor may conduct negotiations regarding the
terms and conditions of the proposed bid and benefit plan renewal.
H. STATE LAW AND LICENSURE REQUIREMENTS
1. PDP Sponsor agrees to comply with State law to the extent that it is
not preempted by Federal law as described in Subpart I of 42 CFR Part
423.
2. PDP Sponsor agrees that where it is operating in a State using a
waiver granted pursuant to 42 CFR Section 423.410, such waiver shall
be valid for three consecutive program years. PDP Sponsor agrees that
expiration of the licensure waiver (and the failure to obtain a
license from the relevant State) may be the basis for CMS deleting
from the PDP Sponsor's service area those PDP Regions affected by the
waiver expiration. CMS may terminate or non-renew the PDP Sponsor's
contract where the expiration of the waiver results in the PDP Sponsor
not being qualified to offer a PDP plan in any PDP Region.
3. PDP Sponsor agrees that where it is operating in a State using a
waiver granted pursuant to 42 CFR Section 423.415, such waiver shall
be valid for the period that the Secretary of the Department of Health
and Human Services determines is appropriate for timely processing of
the PDP Sponsor's license application by the State, but in no case no
more than one year only, beginning on January 1 of the contract year
for which CMS granted the waiver.
I. COORDINATION WITH OTHER PRESCRIPTION DRUG COVERAGE
1. PDP Sponsor agrees to comply with the coordination requirements with
State Pharmacy Assistance Programs (SPAPs) and plans that provide
other prescription drug coverage as described in Subpart J of 42 CFR
Part 423.
2. PDP Sponsor agrees to comply with Medicare Secondary Payer procedures
as stated in 42 CFR Section 423.462.
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J. SERVICE AREA AND PHARMACY ACCESS
1. The PDP Sponsor agrees to provide Part D benefits in the service area
for which it has been approved by CMS utilizing a pharmacy network and
formulary approved by CMS that meet the requirements of 42 CFR Section
423.120.
2. The PDP Sponsor agrees to provide Part D benefits through
out-of-network pharmacies according to 42 CFR Section 423.124.
3. PDP Sponsor agrees to provide benefits by means of point of service
systems to adjudicate prescription drug claims in a timely and
efficient manner in compliance with CMS standards, except when
necessary to provide access in underserved areas, I/T/U pharmacies (as
defined in 42 CFR Section 423.100), and long-term care pharmacies (as
defined in 42 CFR Section 423.100).
4. PDP Sponsor agrees to contract with any pharmacy that meets the PDP
Sponsor's reasonable and relevant standard terms and conditions.
K. COMPLIANCE PLAN/PROGRAM INTEGRITY
1. PDP Sponsor agrees that it will develop and implement a compliance
plan that applies to its Part D-related operations, consistent with 42
CFR Section 423.504(b)(4)(vi).
2. The PDP sponsor agrees to provide notice based on best knowledge,
information and belief to CMS of any integrity items related to
payments from governmental entities, both federal and state, for
healthcare or prescription drug services that would have been reported
as part of 3.1.4 of the PDP application. These items include any
investigations, legal actions or matters subject to arbitration
brought involving the sponsor (or sponsor's firm if applicable) and
its subcontractors (excluding contracted network providers), including
any key management or executive staff, or any major shareholders (5%
or more), by a government agency (state or federal) on matters
relating to payments from governmental entities, both federal and
state, for healthcare and/or prescription drug services. In providing
the notice, the sponsor shall keep the government informed of when the
integrity item is initiated and when it is closed. Notice should be
provided of the details concerning any resolution and monetary
payments as well as any settlement agreements or corporate integrity
agreements.
3. The PDP Sponsor agrees to provide notice based on best knowledge,
information and belief to CMS in the event the Sponsor or any of its
subcontractors is criminally convicted or has a civil judgment entered
against it for fraudulent activities or is sanctioned under any
Federal program involving the provision of health care or prescription
drug services.
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L. LOW-INCOME SUBSIDY
PDP Sponsor agrees that it will participate in the administration of
subsidies for low-income individuals according to Subpart P of 42 CFR Part
423.
M. COMMUNICATION WITH CMS
PDP Sponsor agrees that it shall maintain the capacity to communicate with
CMS electronically in accordance with CMS requirements.
N. BENEFICIARY FINANCIAL PROTECTIONS
The PDP Sponsor agrees to afford its enrollees protection from liability
for payment of fees that are the obligation of the PDP Sponsor in
accordance with 42 CFR Section 423.505(g).
O. RELATIONSHIP WITH RELATED ENTITIES, CONTRACTORS AND SUBCONTRACTORS
1. The PDP Sponsor agrees it maintains ultimate responsibility for
adhering to and otherwise fully complying with all terms and
conditions of this contract with CMS.
2. The PDP Sponsor shall ensure that any contracts or agreements with
subcontractors or agents performing functions on the PDP Sponsor's
behalf related to the operation of the Part D benefit are in
compliance with 42 CFR Section 423.505(i).
3. The PDP Sponsor agrees to act in accordance with 45 CFR Part 76 and
agrees that it will not contract with or employ entities or
individuals that are excluded by the Department of Health and Human
Services, Office of the Inspector General or included on the Excluded
Parties List System maintained by the General Services Administration.
P. CERTIFICATION OF DATA THAT DETERMINE PAYMENT
PDP Sponsor must provide certifications in accordance with 42 CFR Section
423.505(k).
Q. ENROLLMENT RELATED COSTS
PDP Sponsor agrees to payment of fees established by CMS for cost sharing
of enrollment related costs in accordance with 42 CFR Section 423.6.
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ARTICLE III.
RECORD RETENTION AND REPORTING REQUIREMENTS
A. RECORD MAINTENANCE AND ACCESS
PDP Sponsor agrees to maintain records and provide access in accordance
with 42 CFR Sections 423.504(d) and 423.505(d) and (e).
B. GENERAL REPORTING REQUIREMENTS
The PDP Sponsor agrees to submit information to CMS according to 42 CFR
Sections 423.505(f), 423.514 and the "Final Medicare Part D Reporting
Requirements," a document issued by CMS and subject to modification each
program year.
C. LICENSURE-RELATED REPORTING REQUIREMENTS
1. If the PDP Sponsor is operating under a CMS-granted licensure waiver
in any State, the PDP Sponsor agrees to notify CMS in writing of the
State's disposition of the Sponsor's license application within ten
(10) business days of the date that it receives notice of the State's
action.
2. For those States where the PDP Sponsor is operating under a
risk-bearing license, the Sponsor agrees to provide written notice to
CMS of the State's non-renewal of the Sponsor's license within ten
days of receiving notice of the State's action.
3. In the event that a State regulator imposes a sanction against the PDP
Sponsor or requires the implementation of a corrective action plan,
the Sponsor agrees to provide written notice to CMS of such sanction
or corrective action requirement (including basis for the sanction
and/or timeline for corrective action) within ten (10) days of
receiving notice of the State's action.
4. In the event that there is a change in the status of the PDP Sponsor's
risk-bearing license in any State (e.g., suspension, revocation), the
Sponsor agrees to provide written notice to CMS of the change in
status (including basis for the change in status and effective date)
within ten days of receiving notice of the State's action.
5. If the PDP Sponsor is operating a Part D benefit under a CMS-granted
waiver in every State in its service area, and the Sponsor is
terminating or reducing the amount of an existing letter of credit
obtained for the purposes of funding projected losses, the Sponsor
shall provide written notice to CMS of such action 30 days prior to
its effective date. The PDP Sponsor agrees that it must obtain CMS
approval prior to terminating or reducing the amount of a letter of
credit obtained for the purposes of funding projected losses under
Appendix X of the PDP Solicitation.
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D. CMS LICENSE FOR USE OF PLAN FORMULARY
PDP Sponsor agrees to submit to CMS each plan's formulary information,
including any changes to its formularies, and hereby grants to the
Government [and any person or entity who might receive the formulary from
the Government,] a non-exclusive license to use all or any portion of the
formulary for any purpose related to the administration of the Part D
program, including without limitation publicly distributing, displaying,
publishing or reconfiguration of the information in any medium, including
www.medicare.gov, and by any electronic, print or other means of
distribution.
ARTICLE IV.
HIPAA PROVISIONS
HIPAA TRANSACTIONS/PRIVACY/SECURITY
A. PDP Sponsor agrees to comply with the confidentiality and enrollee record
accuracy requirements specified in 42 CFR Section 423.136.
B. PDP Sponsor agrees to enter into a business associate agreement with the
entity with which CMS has contracted to track Medicare beneficiaries' true
out-of-pocket costs.
ARTICLE V.
REQUIREMENTS OF OTHER LAWS AND REGULATIONS
The PDP Sponsor agrees to comply with (a) applicable Federal laws and
regulations designed to prevent fraud, waste and abuse, including, but not
limited to applicable provisions of Federal criminal law, the False Claims Act
(31 U.S.C. Sections 3729 et seq.), and the anti-kickback provision of section
1128B of the Act; (b) applicable HIPAA Administrative Simplification Security
and Privacy rules at 45 CFR parts 160, 162 and 164; and (c) all other applicable
Federal statutes and regulations.
ARTICLE VI.
CONTRACT TERM AND RENEWAL
A. TERM OF CONTRACT
This contract is effective from the date of CMS' authorized
representative's signature through December 31, 2006. This contract shall
be renewable for successive one-year periods thereafter according to 42 CFR
Section 423.506. PDP Sponsor shall not conduct Part D-related marketing
activities prior to October 1, 2005 and shall not process enrollment
applications prior to November 15, 2005. PDP Sponsor shall begin delivering
Part D prescription drug benefit services on January 1, 2006.
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B. QUALIFICATION TO RENEW A CONTRACT
1. In accordance with 42 CFR Section 423.507, the PDP Sponsor will be
determined qualified to renew its contract annually only if:
(a) CMS informs the PDP Sponsor that it is qualified to renew its
contract; and
(b) The PDP Sponsor has not provided CMS with a notice of intention
not to renew in accordance with Article VII of this contract.
2. Although PDP Sponsor may be determined qualified to renew its contract
under this Article, if the PDP Sponsor and CMS cannot reach agreement
on the bid under Subpart F of 42 CFR Part 423, no renewal takes place,
and the failure to reach agreement is not subject to the appeals
provisions in Subpart N of 42 CFR Part 423.
ARTICLE VII.
NONRENEWAL OF CONTRACT
A. NONRENEWAL BY THE PDP SPONSOR
1. The PDP Sponsor may elect not to renew its contract with CMS,
effective at the end of the term of the contract for any reason as
long as PDP Sponsor provides proper notice of the decision according
to the required timeframes.
2. If the PDP Sponsor does not intend to renew its contract, it must
notify:
(a) CMS in writing by the first Monday of June in the year in which
the current contract period ends;
(b) Each Medicare enrollee, at least ninety (90) days before the date
on which the nonrenewal is effective. This notice must include a
written description of alternatives available for obtaining
qualified prescription drug coverage within the PDP region,
including Medicare Advantage-Prescription Drug plans, Medicare
cost plans offering a Part D plan, and other PDPs, and must
receive CMS approval prior to issuance; and
(c) The general public, at least ninety (90) days before the end of
the current calendar year, by publishing a notice in one or more
newspapers of general circulation in each community or county
located in the Part D plan sponsor's service area.
3. If the PDP Sponsor does not renew a contract CMS cannot enter into a
contract with the organization for two (2) years unless there are
special circumstances that warrant special consideration, as
determined by CMS.
4. If the PDP Sponsor does not renew a contract, it must ensure the
timely transfer of any data or files in accordance with CMS
instructions.
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B. NONRENEWAL BY CMS
1. CMS may determine that the PDP Sponsor is not qualified to renew its
contract for any of the following reasons:
(a) The reasons listed in 42 CFR Section 423.509(a) that also permit CMS
to terminate the contract.
(b) The PDP Sponsor has committed any of the acts in 42 CFR Section
423.752 that support the imposition of intermediate sanctions or civil
money penalties under 42 CFR Section 423.750.
2. CMS will provide notice of its decision whether the PDP Sponsor is
qualified to renew its contract as follows:
(i) To the PDP Sponsor by May 1 of the current contract year.
(ii) If CMS decides that the PDP Sponsor is not qualified to
renew its contract, to the PDP Sponsor's Medicare enrollees
by mail at least ninety (90) days before the end of the
current calendar year.
(iii) If CMS determines that the PDP Sponsor is not qualified to
renew its contract, to the general public at least ninety
(90) days before the end of the current calendar year, by
publishing a notice in one or more newspapers of general
circulation in each community or county located in the PDP
Sponsor's service area.
(iv) CMS will provide the notice described in (B)(2)(ii) and
(iii) of this Article where a non-renewal results because
CMS and the PDP Sponsor are unable to reach agreement on the
bid under 42 CFR Part 423, Subpart F.
3. CMS shall give the PDP Sponsor written notice of its right to appeal
the decision that the sponsor is not qualified renew its contract in
accordance with 42 CFR Section 423.642(b).
ARTICLE VIII.
MODIFICATION OR TERMINATION OF CONTRACT
A. CONTRACT MODIFICATION OR TERMINATION BY MUTUAL CONSENT
1. This contract may be modified or terminated at any time by written
mutual consent of the parties.
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2. If this contract is terminated by mutual consent, the PDP Sponsor must
provide notice to its Medicare enrollees and the general public in
accordance with CMS's instructions.
3. If the contract is modified by mutual consent, the PDP Sponsor must
notify its Medicare enrollees of any changes that CMS determines are
appropriate for notification according to the process and timeframes
specified by CMS.
4. If a contract is terminated under section A of this Article, the PDP
Sponsor must ensure the timely transfer of any data or files.
B. TERMINATION OF CONTRACT BY CMS
CMS may terminate the contract in accordance with 42 CFR Section 423.509.
C. TERMINATION OF CONTRACT BY THE PDP SPONSOR
The PDP Sponsor may terminate the contract only in accordance with 42 CFR
Section 423.510.
ARTICLE IX.
INTERMEDIATE SANCTIONS
Consistent with Subpart O of 42 CFR Part 423, the PDP Sponsor shall be
subject to sanctions and civil money penalties.
ARTICLE X.
SEVERABILITY
Severability of the contract shall be in accordance with 42 CFR 423.504(e).
ARTICLE XI.
IMPACT OF JOINT ENTERPRISE ARRANGEMENT ON THIS CONTRACT
A. CMS agrees that the members of the joint enterprise are not jointly and
severally liable under this contract for the risk of the benefits that an
individual member of the joint enterprise is obligated to provide the Part
D eligible individuals enrolled in the plan offered by the PDP Sponsor who
reside in the portion of the plan's service area that is served by the
member of the joint enterprise.
B. The PDP sponsor agrees that it will submit a single bid (including a
uniform benefit, uniform cost-sharing and a uniform premium) covering at
least one or more entire PDP Regions for each PDP plan the PDP Sponsor
intends to offer. The PDP Sponsor agrees that it will offer a uniform Part
D benefit throughout each PDP plan's service area.
C. The PDP Sponsor acknowledges that CMS will make a single monthly payment to
the PDP Sponsor (to a bank account held jointly by the joint enterprise
members, which
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account may also be held by an agent or administrator designated by the
joint enterprise members, or to a joint enterprise member designated by the
PDP Sponsor) for each PDP plan the Sponsor offers. The PDP Sponsor
acknowledges that CMS Part D payments shall be distributed to the joint
enterprise members in accordance with the agreement the joint enterprise
members have made among themselves. In the event of a CMS overpayment to
the PDP Sponsor, CMS will seek reimbursement from each of the joint
enterprise members of an amount equal to the portion of the CMS overpayment
each joint enterprise member received under the payment allocation
agreement the joint enterprise members have made among themselves. The
agreement the joint enterprise members have made among themselves with
respect to their performance under this contract is provided as Attachment
B.
D. CMS agrees that the members of the joint enterprise are at risk, and fully
responsible for, only those Part D eligible individuals enrolled in a plan
offered by the joint enterprise who reside in the state in which the joint
enterprise member is licensed (or been granted a waiver of the licensure
requirement by CMS) and operating.
E. The PDP Sponsor agrees to report to CMS all required data related to
payment, enrollment and oversight on a plan-wide basis (i.e., data should
not be reported directly to CMS from each of the joint enterprise members).
F. The PDP Sponsor agrees to designate an individual or entity that will serve
as the PDP Sponsor's point of contact for all communications with CMS
concerning matters related to this contract.
G. The PDP Sponsor agrees that the members of the joint enterprise will meet
individually all requirements related to the organizational qualifications
of a PDP sponsor under this contract, including but not limited to state
licensure, fidelity bonds for Sponsor officers, compliance plan and
certifications associated with payment.
H. The PDP Sponsor agrees that the joint enterprise members are responsible
for meeting individually each of the compliance plan/program integrity
notice and reporting requirements stated in Article II, Sections K.2, 3
and 4.
I. The PDP Sponsor agrees that CMS may terminate or non-renew the contract in
the event that one or more of the joint enterprise members withdraws from
the joint enterprise or is no longer qualified to be a Part D sponsor, and
the remaining joint enterprise members neither assume the obligations of
the departing member or arrange for a new entity (with approval from CMS)
to assume such obligations. Such termination or non-renewal will occur only
when the departure of a joint enterprise member prevents the PDP Sponsor
from offering a Part D plan throughout at least one PDP service area.
J. The PDP Sponsor agrees that CMS may impose intermediate sanctions on all
joint enterprise members based on the conduct of one or more of the joint
enterprise members. The PDP Sponsor acknowledges that CMS is not required
to determine each joint
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enterprise member's degree of responsibility for conduct that is the basis
for the sanction or divide the application of the sanction among the
members.
K. In the event of any conflict between a provision of this Article XI and any
other provision of this contract, the provisions of this Article XI shall
prevail.
ARTICLE XII.
MISCELLANEOUS
A. DEFINITIONS
Terms not otherwise defined in this contract shall have the meaning given
to such terms in 42 CFR Part 423.
B. ALTERATION TO ORIGINAL CONTRACT TERMS
The PDP Sponsor agrees that it has not altered in any way the terms of the
PDP contract presented for signature by CMS. PDP Sponsor agrees that any
alterations to the original text the PDP Sponsor may make to this contract
shall not be binding on the parties.
C. ADDITIONAL CONTRACT TERMS
The PDP Sponsor agrees to include in this contract other terms and
conditions in accordance with 42 CFR Section 423.505(j).
D. CMS APPROVAL TO BEGIN MARKETING AND ENROLLMENT ACTIVITIES
PDP Sponsor agrees that it must complete CMS operational requirements prior
to receiving CMS approval to begin Part D marketing and enrollment
activities. Such activities include, but are not limited to, establishing
and successfully testing connectivity with CMS systems to process
enrollment applications (or contracting with an entity qualified to perform
such functions on PDP Sponsor's behalf) and successfully demonstrating
capability to submit accurate and timely price comparison data. To
establish and successfully test connectivity, the PDP Sponsor must, 1)
establish and test physical connectivity to the CMS data center, 2) acquire
user identifications and passwords, 3) receive, store, and maintain data
necessary to perform enrollments and send and receive transactions to and
from CMS, and 4) check and receive transaction status information.
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IN WITNESS WHEREOF, the parties hereby execute this contract.
FOR THE PDP SPONSOR HEALTHSPRING, INC.:
JEFF ROTHENBERGER SR. VP & CORPORATE COO
- --------------------------------------------------------------------------------
Printed Name Title
/s/ JEFF ROTHENBERGER 9/13/05
- --------------------------------------------------------------------------------
Signature Date
44 VANTAGE WAY, SUITE 300
HEALTHSPRING, INC. NASHVILLE, TN 37228
- --------------------------------------------------------------------------------
Organization Address
FOR THE PDP SPONSOR HEALTHSPRING OF ALABAMA, INC.:
JEFF ROTHENBERGER SR. VP & CORPORATE COO
- --------------------------------------------------------------------------------
Printed Name Title
/s/ JEFF ROTHENBERGER 9/13/05
- --------------------------------------------------------------------------------
Signature Date
TWO PERIMETER PARK SOUTH
SUITE 300 W.
HEALTHSPRING OF ALABAMA, INC. BIRMINGHAM, AL 35243
- --------------------------------------------------------------------------------
Organization Address
FOR THE CENTERS FOR MEDICARE & MEDICAID SERVICES:
/s/ Robert Donnelly 9/3/05
- ----------------------------------- --------------------------
Robert Donnelly Date
Director
Medicare Drug Benefit Group
Center for Beneficiary Choices
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ATTACHMENT A
PART D BENEFIT PLAN(S) - DESCRIPTION
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ATTACHMENT B
ATTACH A COPY OF EXECUTED AGREEMENT AMONG MEMBERS OF JOINT ENTERPRISE.
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JOINT ENTERPRISE AGREEMENT
THIS JOINT ENTERPRISE AGREEMENT (the "Agreement") is by and between
HealthSpring, Inc., a Tennessee corporation ("HealthSpring TN") and HealthSpring
of Alabama, Inc., an Alabama corporation ("HealthSpring AL"). This Agreement is
made and entered into March 31, 2005 to be effective January 1, 2006.
RECITALS
A. HealthSpring TN holds a license or certificate of authority from the
Tennessee Department of Commerce and Insurance to operate a health maintenance
organization in the State of Tennessee.
B. HealthSpring AL holds a license or certificate of authority from the
Alabama Department of Insurance to operate a health maintenance organization in
the State of Alabama.
C. Both parties desire to enter into this Joint Enterprise Agreement to
provide services to Medicare Part D beneficiaries in Region 12.
D. HealthSpring TN and HealthSpring AL agree that all obligations to CMS as
a Medicare Part D Drug Benefit ("Benefit Program") contractor will be the full
responsibility of both parties as set forth in the terms and conditions of this
Agreement.
AGREEMENT:
In consideration of the foregoing, the mutual covenants and agreements
contained herein, the sufficiency of which is herein acknowledged, HealthSpring
TN and HealthSpring AL agree as follows:
ARTICLE I
RIGHTS & OBLIGATIONS
1. Centers for Medicare & Medicaid Services ("CMS"). Both parties agree to
individually and jointly fulfill all Benefit Program requirements as set
forth in applicable federal law, rule or regulation. The parties further
agree to fulfill all contractual obligations as set forth in this Agreement
and the agreement between CMS, HealthSpring TN and HealthSpring AL
governing the administration of the Medicare Part D Drug Benefit for Region
12. This agreement shall be attached as Attachment A to this Agreement and
is herein incorporated by reference as if set forth fully herein.
2. Formulary. Both parties agree to create and maintain a formulary to support
Benefit Program requirements. Both parties agree that the formulary shall
be filed annually with CMS for approval. The CMS approved formulary will be
created to include all required medications. Both parties agree to provide
negotiated prices on covered Part D medications. The formulary will include
medications with different strengths and doses including a broad selection
of generic drugs available for the beneficiaries.
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3. Licensure. HealthSpring TN and HealthSpring AL are both licensed as health
maintenance organizations in Tennessee and Alabama respectively. Both
parties agree to take all actions necessary to maintain all applicable
licensure in accordance with state and federal law.
4. Service Area. Both parties agree to jointly offer a benefit Program in
region 12. The parties further agree to take all actions necessary to
maintain the service area for HealthSpring TN and HealthSpring AL.
5. Customer Service & Enrollment. Both parties agree to create and maintain
appropriate systems to administer and support and enrollment in accordance
with CMS and Benefit Program requirements. These systems will also include
staffing and systems to provide customer service to beneficiaries including
enrollment assistance, toll-free customer service and education on the Part
D benefit.
6. Marketing. Both parties shall be responsible for marketing activities
within their respective licensed service areas. These outreach activities
and materials shall be consistent with CMS standards for completeness,
appropriateness and understandability. In addition the parties agree that
marketing efforts shall be coordinated to ensure consistency throughout the
region being served by this Agreement. Both parties agree to perform such
activities in accordance with Benefit Program requirements as well as all
applicable state and federal laws rules or regulations.
7. Benefit Administration. Both parties agree to administer the Benefit
Program using appropriate deductibles and copayments, managing the benefit
utilizing appropriate pharmacy benefit managerial tools and operating
effective oversight of the benefit Both parties further agree to administer
the benefit program in accordance with applicable requirements, state and
federal law.
8. Claims Processing and Administration. Both parties agree to either
directly, or through a contract pharmacy benefits manager, process and
administer claims at the point of sale for the retail network pharmacies
and the beneficiaries in accordance with Benefit Program requirements and
any applicable state or federal law.
9. Reporting. Both parties agree to prepare and deliver to each other and CMS
any and all reports or data necessary to meet all reporting requirements of
benefit Program and to ensure appropriate oversight by the joint enterprise
entities of all contractual obligations.
10. Records Maintenance. Both parties warrant that they will prepare and
maintain all medical and other records required by law. Both parties
acknowledge and agree to the following: the Department of Health and Human
Services (DHHS), the Comptroller General, or their designee may evaluate,
through inspection or other means: (a) the quality, appropriateness and
timeliness of services furnished to Medicare Part D beneficiaries; and (b)
the retail pharmacies. Both parties further agree that DHHS, the
Comptroller General, or their designees may audit, evaluate, or inspect any
books,
18
contracts, medical records, patient care documentation, that pertain to any
aspect of services performed, reconciliation of benefit liabilities and
determination of amounts payable under CMS Contract, or as the Secretary of
the federal Department of Health and Human Services may deem necessary to
enforce the CMS Contract. The parties further agree that DHHS, the
Comptroller General, or their designee's right to inspect, evaluate and
audit extends through six (6) years from the final date of the contract
period of CMS Contract or completion of any audit, whichever is later.
11. Retail Pharmacy Network. Both parties agree to offer a comprehensive
network of retail pharmacies which shall provide access, in accordance with
Benefit Program requirements, to Medicare Part D beneficiaries.
12. Computer Systems. Both parties shall maintain a computerized information
system ("Information System") necessary to carry out their responsibilities
under this Agreement These functions shall include, but not be limited to:
enrollment functionality, the ability to provide claims based data,
acceptance of CMS payments, tracking methodology for out of pocket costs,
coordination of benefits with secondary insurers, and the support of
e-prescribing. Parties agree that each shall be separately responsible for
continuing to update the applicable Information System and adapting it to
any changes that occur in the business of the parties, including any
changes resulting from a change in state or Federal laws or regulations.
13. Quality Improvement. Each party shall be responsible for the quality of
Contracted Services rendered to Medicare Part D beneficiaries. The quality
of services rendered shall be monitored under the Quality Improvement
Program applicable to the particular Benefit Program. In the event that the
standard or quality of care furnished by a retail pharmacy network provider
is found to be unacceptable under any Quality Improvement Program, either
party shall give written notice to the contracted provider to correct the
specified deficiencies within the time period specified in the notice.
14. Drug Utilization Review. Both parties agree to maintain and participate in,
the Drug Utilization Management Program. This program shall be administered
in accordance with applicable Benefit Program requirements and shall
include medication therapy management programs.
15. Grievance & Appeals. Both parties agree to comply with CMS's procedures for
member grievances, coverage determinations, organization determinations and
member appeals as set forth in the Benefit Program requirements for Benefit
Programs under the Medicare Part D Program.
16. Privacy & Confidentiality. The parties agree to hold all confidential or
proprietary information or trade secrets of each other in trust and
confidence and agree that such information shall be used only for the
purposes contemplated herein, and not for any other purpose. Specifically,
the parties agree to keep strictly confidential all compensation rates set
forth in this Agreement and its Addenda, except that this provision does
not preclude disclosure of the method of compensation in accordance with
Benefit
19
Program requirements. In addition the parties acknowledge and agree to
administer all elements of the Benefit program in accordance with federal
and state privacy requirements including, but not limited to, HIPAA as
amended from time to time.
17. Financial Solvency. In order to ensure the financial solvency of both
parties to this Agreement, the parties agree to provide the following
information for review as required or upon reasonable request.
o Reviewed Financial Statements. Both parties shall provide to the
other party a true copy of their annual financial statement(s),
reviewed by an independent certified public accountant, within one
hundred eighty (180) days after the end of the fiscal year. In
addition, access to bank reconciliation statements and/or bank
investment account statements shall be provided to both parties. At
the same time, parties shall also provide a copy of any management
letter prepared by such accountants.
o Notice of Reserve Deficiency. If either party is required to
maintain any financial reserve requirement(s) by the regulatory agency
having jurisdiction over their operations within the State of
licensure, then both parties shall provide notice to the other party
in the event of:
o A party's failure to comply with any financial reserve
requirement; and
o A copy of the regulatory agency's written notice to such party
of such agency's determination, assertion, allegation, or
contention that the entity is not in compliance with any
financial reserve requirement, notwithstanding that the entity
may dispute, disagree with, or otherwise question such
determination, assertion, allegation or contention of the agency.
18. Compliance with Laws, Rules & Regulations. Both parties agree to comply
with: (a) Title VI of the Civil Rights Act of 1964 as implemented by
regulations at 45 C.F.R. part 84; (b) The Age Discrimination Act of 1975 as
implemented by regulations at 45 C.F.R. part 91; (c) The Rehabilitation Act
of 1973; (d) The Americans With Disabilities Act and (e) all other
applicable laws and rules, including, without limitation, all applicable
Medicare rules and regulations and CMS instruction as amended from time to
time. HealthSpring TN and HealthSpring AL acknowledge that they receive
federal funds and must comply with all laws, rules and regulations
applicable to entities receiving federal funds.
ARTICLE II
TERM OF AGREEMENT, TERMINATION
1. Term of Agreement. This Agreement shall be for an Initial Term of three
years beginning on the Effective Date and ending December 31, 2008. The
Agreement shall
20
renew for additional terms consistent with the requirements of the Benefit
Program unless either party gives written notice of its intent to non-renew
the Agreement at least ninety (90) days prior to the expiration of the
Initial Term.
2. Termination of the Agreement. Either party may terminate this Agreement
upon written 30 day notice to the other party, in the event of (a) the
other party's violation of any applicable law, rule or regulations; (b) the
other party's loss, revocation or restriction of any required state or
federal license or certificate of authority whether brought about by a
regulatory agency or an administrative proceeding; (c) the other party's
failure to comply with the terms, conditions of this Agreement or other
Benefit Program Requirements; or (d) the other party's breach of any
section of this Agreement. If either party determines that termination
under this Section is required, then before terminating the Agreement, the
applicable party shall provide written explanation to CMS of the reasons
for termination and the plan to ensure full services will be provided to
the entire region being served.
3. Termination Due to Material Breach. In the event that either party fails to
cure a material breach of this Agreement within thirty (30) days of receipt
of written notice to cure from the other, the non-defaulting party may
terminate this Agreement, effective as of the expiration of said thirty
(30) day period. If the breach is cured within such thirty (30) day period,
or if the breach is one which cannot reasonably be corrected within thirty
(30) days, and the defaulting party makes substantial and diligent progress
toward correction during such thirty (30) day period, this Agreement shall
remain in full force and effect. Either party may terminate this Agreement
immediately by providing written notice to the other party upon (i) the
filing by or against a party in a court of competent jurisdiction of a
petition for bankruptcy, reorganization, dissolution, liquidation, or
receivership; or (ii) the inability of a party to pay its debts as they
mature or an assignment of assets by a party for the benefit of its
creditors.
4. Effect of Termination. In the event that this Agreement terminates for any
of the reasons set forth above both parties agree that the remaining party
has an obligation to apply for any required state or federal license to
enable the surviving entity to provide services for Benefit Program
beneficiaries in the entire Part D region being served under this
Agreement. In the event of a failure to meet all operational
responsibilities by one party the other party agrees to assume such
operational responsibilities until such time as the other party is able to
assume these obligations in accordance with the Agreement. With respect to
Benefit Programs under the Medicare Program, both parties acknowledges and
agree that in the event of either HealthSpring's insolvency or other
cessation of operations, benefits to Members will continue through the
period for which payment from CMS to the parties has been paid or the
Benefit Program requirements. Any modification, addition, or deletion to
the provisions of this Section shall be effective on a date no earlier than
fifteen (15) days after CMS has received written notice of such proposed
change and has approved such change.
21
ARTICLE III
COMPENSATION & PAYMENT ALLOCATION
1. CMS Payments. The payments received from CMS will be allocated between
HealthSpring TN and HealthSpring AL based upon the number of beneficiaries
covered in each parties respective service area. This allocation will be
administered using a percentage-based methodology triggered by membership.
The parties agree to set up a joint bank account with joint signatory
authority into which all CMS payments will be deposited.
2. Risk Corridor Allocation. The risk corridor will be administered in
accordance with the methodology set forth in the call letter for the
Medicare Part D Drug Benefit. Both parties agree that the risk corridor
payments will be allocated to each party consistent with their financial
results. NewQuest, the parent company of both parties, also reserves the
right to reallocate the risk corridor payments in the event either party is
experiencing financial distress or solvency concerns and to ensure the
overall viability of the region being served by the two entities.
ARTICLE IV
MISCELLANEOUS
1. Assignment By Parties. Neither party shall assign its rights or obligations
under this Agreement without the prior written consent of the other party
and/or CMS.
2. Binding on Successors and Assigns. The terms, covenants, conditions,
provisions and agreements herein contained shall be binding upon and inure
to the benefit of the parties hereto, their successors and assigns as
permitted by this Agreement.
3. Entire Agreement Amendments. This Agreement constitutes the entire
understanding of the parties hereto. All amendments or modifications shall
be mutually agreed to in writing. The waiver by either party 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 thereof.
4. Applicable Law. This Agreement shall be governed by the laws of the State
of Tennessee the invalidity or unenforceability of any terms or conditions
hereof shall in no way affect the validity or enforceability of any other
term or provision.
5. Captions and Heading. The captions and heading throughout this Agreement
are for convenience of reference only, and shall in no way be held or
deemed to define, limit, describe, explain, modify, amplify or add to the
interpretation, construction or meaning of any provision of or to the scope
or intent of this Agreement nor in any way affect the Agreement.
6. Effective Date. This Agreement shall be binding as of January 1, 2006 (the
"Effective Date"), subject to any required regulatory approval.
22
7. Notices. Any notices required to be given pursuant to the terms and
provision hereof shall be sent by certified mail, return receipt requested,
postage prepaid, to:
HealthSpring, Inc.: 44 Vantage Way, Suite 300
Nashville, TN
Attn: President
and to HealthSpring of Alabama,
Inc at: Two Perimeter Park South, Suite 300
Birmingham, AL
Attn: President
IN WITNESS WBEREOF, the parties have executed this Agreement as of the date set
forth below.
HEALTHSPRING, INC. HEALTHSPRING OF ALABAMA, INC.
By: By:
---------------------------------- -----------------------------------
Name: David K. Ellwanger Name: W. Bradley Green
Title: President Title: President
Date: Date:
-------------------------------- ---------------------------------
23
ATTACHMENT A
CMS AGREEMENT REGION 12
24
Health Plan Management System
Home | MCO Contacts | Help
HPMS
CY 2006 BENEFIT ATTESTATION
Please review the following information. If all of the information is correct,
then select the "create PDF" below to generate a PDF version of the attestation
that can be printed, signed and mailed to CMS along with the contract.
Note: If the CEO or CFO contact information is incorrect, please edit this
information prior to printing by selecting the "Home" link at the top. On the
HPMS homepage, select "Contract Management" -- "Select Contract Number" --
"Contact Information".
Prescription Drug Plan Attestation of Benefit Plan and Price
HEALTHSPRING INC. HEALTHSPRING OF ALABAMA, INC.
S5932
Date: 09/13/2005
I attest that the following plan numbers as established in the final Plan
Benefit Package (PBP) will be operated by the above-stated organization and made
available to eligible Medicare beneficiaries in the approved service area during
program year 2006.
<Table>
<Caption>
- ----------------------------------------------------------------------------------------------------------------------------
PLAN SEGMENT TRANSACTION PART D CMS APPROVAL EFFECTIVE
ID ID VERSION PLAN NAME PLAN TYPE TYPE PREMIUM DATE DATE
- ----------------------------------------------------------------------------------------------------------------------------
HealthSpring Medicare
001 0 3 Prescription Prescription Initial 25.54 09/06/2005 01/
Drug Plan Drug Plan
- ----------------------------------------------------------------------------------------------------------------------------
</Table>
/s/ David Ellwanger 9/13/05
- ----------------------------------- -------------------------------
CEO: DATE:
David K. Ellwanger
President
44 Vantage Way
Suite 300
Nashville, TN 37228
615-291-7000
25
/s/ Kevin Bailey 9/13/05
- ------------------------------------ ----------------------------------
CFO: DATE:
Kevin Bailey
Chief Financial Officer
44 Vantage Way
Suite 300
Nashville, TN 37228
615-291-7000
26
Health Plan Management System
Home | MCO Contacts | Help
HPMS
CY 2006 BENEFIT ATTESTATION
Please review the following information. If all of the Information Is correct,
then select the "create PDF" below to generate a PDF version of the attestation
that can be printed, signed and mailed to CMS along with the contract.
Note: If the CEO or CFO contact Information Is Incorrect, please edit this
Information prior to printing by selecting the "Home" link at the top. On the
HPMS homepage, select "Contract Management" -- "Select Contract Number" --
Contact Information".
Prescription Drug Plan Attestation of Benefit Plan and Price
HEALTHSPRING INC. HEALTHSPRING OF ALABAMA, INC.
S5932
Date: 09/13/2005
I attest that the following plan numbers as established in the final Plan
Benefit Package (PBP) will be operated by the above-stated organization and made
available to eligible Medicare beneficiaries in the approved service area during
program year 2005.
<Table>
<Caption>
- ----------------------------------------------------------------------------------------------------------------------------
PLAN SEGMENT TRANSACTION PART D CMS APPROVAL EFFECTIVE
ID ID VERSION PLAN NAME PLAN TYPE TYPE PREMIUM DATE DATE
- ----------------------------------------------------------------------------------------------------------------------------
HealthSpring Medicare
001 0 3 Prescription Prescription Initial 25.54 09/06/2005 01/01/06
Drug Plan Drug Plan
- ----------------------------------------------------------------------------------------------------------------------------
</Table>
/s/ David Ellwanger 9/15/05
- ------------------------------------- --------------------------------
CEO: DATE:
David K. Ellwanger
President
44 Vantage Way
Suite 300
Nashville, TN 37228
615-291-7000
HealthSpring, Inc.
27
/s/ Kevin Bailey 9/15/05
- -------------------------------------- ---------------------------------
CFO: DATE:
Kevin Bailey
Chief Financial Officer
44 Vantage Way
Suite 300
Nashville, TN 37228
615-291-7000
HealthSpring, Inc.
28
Health Plan Management System
Home | MCO Contacts | Help
HPMS
CY 2006 BENEFIT ATTESTATION
Please review the following information. If all of the information Is correct,
then select the "create PDF" below to generate a POF version of the attestation
that can be printed, signed and mailed to CMS along with the contract.
Note: If the CEO or CPO contact information is Incorrect, please edit this
Information prior to printing by selecting the "Home" link at the top. On the
HPMS homepage, select "Contract Management" -- "Select Contract Number" --
"Contact Information".
Prescription Drug Plan Attestation of Benefit Plan and Price
HEALTHSPRING INC. HEALTHSPRING OF ALABAMA, INC.
S5932
Date: 09/13/2005
I attest that the following plan numbers as established In the final Plan
Benefit package (PBP) will be operated by the above-stated organization and made
available to eligible Medicare beneficiaries In the approved service area during
program year 2006.
<Table>
<Caption>
- ----------------------------------------------------------------------------------------------------------------------------
PLAN SEGMENT TRANSACTION PART D CMS APPROVAL EFFECTIVE
ID ID VERSION PLAN NAME PLAN TYPE TYPE PREMIUM DATE DATE
- ----------------------------------------------------------------------------------------------------------------------------
HealthSpring Medicare
001 0 3 Prescription Prescription Initial 25.54 09/06/2005 01/01/06
Drug Plan Drug Plan
- ----------------------------------------------------------------------------------------------------------------------------
</Table>
/s/ Brad Green 9/15/05
- ------------------------------------ --------------------------------
CEO: DATE:
President
Brad Green, President
Two Perimeter Park South
Suite 300 West
Birmingham, AL 35243
205-968-1000
HealthSpring of Alabama, Inc.
29
/s/ David Beauchaine 9/15/05
- --------------------------------------- ------------------------------
CFO: DATE:
Chief Financial Officer
David Beauchaine, CFO
Two Perimeter Park South
Suite 300 West
Birmingham, AL 35243
205-968-1000
HealthSpring of Alabama. Inc.
30