Second Amendment
to the
AARP Health Insurance Agreement
by and among
American Association of Retired Persons,
Trustees of the AARP Insurance Plan
and
United HealthCare Insurance Company
The American Association of Retired Persons and the Trustees of the AARP
Insurance Plan hereby agree with the United HealthCare Insurance Company to
the Amendment of the AARP Insurance Agreement, entered into by said parties
and dated as of February 26, 1997, as set forth below:
A. Section 2.86 of the Agreement is amended to read as follows:
"NETWORK PROVIDER means any health care provider that
has agreed to participate in the Medicare Select plan
made available under the SHIP, other than a Network
Pharmacy, Network Pharmaceutical Manufacturer, or
Network Pharmacy Benefit Manager."
B. Article 2 of the Agreement is amended by the addition of the following
Sections 2.119, 2.120, 2.121, 2.122, 2.123, 2.124 and 2.125:
"2.119 NETWORK PHARMACY means a retail pharmacy or mail order
pharmacy, which has agreed with United to participate
in the Health Care Options Pharmacy Service.
2.120 NETWORK PHARMACEUTICAL MANUFACTURERS means a pharmaceutical
manufacturer that has agreed to provide rebates or like
sums in connection with the Health Care Options Pharmacy
Service.
2.121 NETWORK PHARMACY BENEFIT MANAGER means a pharmacy benefit
manager that has agreed to provide on-line point of service
prescription processing and other administrative services
in connection with the Health Care Options Pharmacy Service.
2.122 SHIP PHARMACY INSURED means a SHIP Insured that is covered
by a SHIP Pharmacy Plan.
2.123 SHIP PHARMACY PLAN means a Medicare Supplement, pre-
standardized Medicare Supplement or Medicare Select policy
or certificate offered under the SHIP Plan which provides
an outpatient prescription drug benefit.
2.124 HEALTH CARE OPTIONS PHARMACY SERVICE means a service
offered by United in connection with any SHIP Pharmacy Plan
which (i) offers SHIP Pharmacy Insureds access to Network
Pharmacies at which or through which the SHIP Pharmacy
Insured may receive discounted pharmaceuticals; (ii) offers
SHIP Pharmacy Insureds accessing Network Pharmacies with
on-line point of service prescription processing; (iii)
includes quality of care mechanisms, including drug
utilization review programs; and (iv) includes such other
features as may be mutually agreed to by the parties hereto.
The service shall only apply to a SHIP Pharmacy Insured
during such period in which the outpatient prescription drug
benefits of the SHIP Pharmacy Plan have not been exhausted.
2.125 USUAL AND CUSTOMARY PRICE means the reasonable and customary,
non-discounted fee, i.e., the retail price, for a prescription,
which is charged by a pharmacy which does not exceed the fee
the pharmacy would charge any full-paying customer."
C. Section 3.2.2 of the Agreement is amended by the addition of new
subsection (h) to read as follows:
"(h) United shall make available to all SHIP Pharmacy Insureds
access to the Health Care Options Pharmacy Service. United
shall develop and manage relationships with pharmaceutical
vendors, including mail service vendors, and pharmaceutical
manufacturers and/or wholesalers in support of the Health
Care Options Pharmacy Service. United will manage these
vendor relationships to promote savings, network stability
and quality improvement and to address service concerns that
SHIP Pharmacy Insureds may have with any such vendor."
D. Article 6 of this Agreement is amended by the addition of the following
new Sections 6.10.3 and 6.10.3.1.
"6.10.3 HEALTH CARE OPTIONS PHARMACY SERVICE. United shall be
entitled to receive *** of the savings obtained by the
Health Care Options Pharmacy Service. For such purposes,
savings obtained by the service means: (i) the difference
between the Usual and Customary Price for the prescription
and the amount that is payable to the Network Pharmacy for
the prescription by both the SHIP Pharmacy Insured and the
SHIP Pharmacy plan; plus (ii) the drug formulary rebates
obtained from Network Pharmacy Manufacturers for prescriptions
purchased through the Health Care Options Pharmacy Service.
In no event shall United be entitled, during any one (1)
calendar year, to receive an amount in excess of
*** Represents text deleted pursuant to a confidentiality treatment
request filed with the Securities and Exchange Commission pursuant
to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.
the amount United received or is expected to receive
for such calendar year, from Network Pharmaceutical
Manufacturers in the form of drug formulary rebates
or like sums. No separate charge will be made to
any SHIP Pharmacy Insured with respect to any
discount taken. In the event that the drug
formulary rebates obtained from Network
Pharmaceutical Manufacturers for prescriptions
purchased through the Health Care Options Pharmacy
Service exceed *** of the savings obtained by
the Health Care Options Pharmacy Service, then
United shall credit any such excess amount to the
RSF. United shall provided AARP (i) with written
quarterly reports of all savings obtained from
Network Pharmacies in connection with the Health
Care Options Pharmacy Service during the quarter
prior to the quarter in which the report is
generated and (ii) with reports regarding sums
received from Network Pharmaceutical Manufacturers
at the end of the calendar quarter following the
quarter in which such sums were received. The
compensation payable under this Section 6.10.3
shall remain in effect for the duration of this
Agreement, except as otherwise agreed to by the
parties and as set forth below. Any change in the
compensation shall become effective no sooner than
(i) July 1, 2002 and shall require that any party
seeking the same provide the other with at least
one hundred and eighty (180) days notice of the
same; or (ii) in the event of a material change in
the availability or the amount of drug formulary,
rebates or like sums provided by Network
Pharmaceutical Manufacturers or volume discounts or
like sums provided by Network Pharmacies and shall
require that any party seeking the same provide the
other with at least one hundred and eighty (180)
days notice of the same or in the event of
circumstances dictating a shorter notice period,
such shorter period as is reasonable given such
circumstances.
6.10.3.1 ELECTRONIC PRESCRIPTION PROCESSING. In addition to
the sum set forth in Section 6.10.3 above, United
shall be authorized to receive *** per
prescription that is electronically processed for
the Health Care Options Pharmacy Service. The price
of these services may increase from year to year as
mutually agreed to by the parties hereto. In
addition to other provisions of this Agreement, the
parties agree to modify the Administrative Service
Fee in the event that there is a material change in
the number of claims which United processes. The
parties agree that any change in the fees payable
hereunder will be commensurate with the impact of
the change on the costs of providing the service by
United or its representative."
*** Represents text deleted pursuant to a confidentiality treatment request
filed with the Securities and Exchange Commission pursuant to Rule 24b-2
of the Securities Exchange Act of 1934, as amended.
E. Section 7.1.1 of the Agreement is amended by the addition of a new final
sentence to read as follows:
"In establishing and maintaining relationships with
Network Pharmacies, Network Pharmaceutical
Manufacturers, and/or Network Pharmacy Benefit
Managers in connection with the HealthCare Options
Pharmacy Service, United shall be authorized to
disclose to such providers information contained in
the Database relating to such Service and to
authorize such providers to use such information in
connection therewith provided however that no such
use shall be in any manner which directly or
indirectly is identifiable to AARP, AARP Trust or
any AARP members."
F. The provisions of this Amendment shall become effective January 1, 1998.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their duly authorized officers as of the date first written above.
AMERICAN ASSOCIATION OF RETIRED PERSONS
By: /s/ HORACE B. DEETS
------------------------------------
Print Name: HORACE B. DEETS
----------------------------
Print Title: EXECUTIVE DIRECTOR
---------------------------
TRUSTEES OF THE AARP INSURANCE PLAN
By: /s/ HORACE B. DEETS
------------------------------------
Print Name: HORACE B. DEETS
----------------------------
Print Title: SECRETARY
---------------------------
UNITED HEALTHCARE INSURANCE COMPANY
By: /s/ LOIS QUAM
------------------------------------
Print Name: LOIS QUAM
----------------------------
Print Title: CHIEF EXECUTIVE OFFICER,
AARP DIVISION
---------------------------