Exhibit 10.2
AMENDED AND RESTATED
ADMINISTRATIVE SERVICES AGREEMENT
This Amended and Restated Administrative Services Agreement (this
"Agreement") is made and entered into by and between Rio Grande HMO, Inc., a
Texas corporation (the "Plan"), and, Lifemark Corporation, a Delaware
corporation ("Lifemark").
WITNESSETH:
WHEREAS, the Plan is a qualified health plan under a managed care
program administered by the Texas Department of Human Services ("TDHS") of the
State of Texas.
WHEREAS, Lifemark is the successor organization to Managed Care
Solutions, Inc., a Delaware corporation("MCS");
WHEREAS, the Plan engaged MCS to provide administrative and management
services in connection with the operation of the Plan Program (defined below)
pursuant to an Administrative Services Agreement (the "Original Agreement") and
an Amendment to Administrative Services Agreement (the "First Amendment"), both
effective on March 31, 1997;
WHEREAS, The Plan and Lifemark desire to enter into the Amended and
Restated Administrative Services Agreement which accurately restates and
integrates the Original Agreement and First Amendment and as further amended by
this Agreement as hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, the parties agree as follows:
1. DEFINITIONS.
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1.1 THE PLAN PROGRAM. "The Plan Program" shall mean all
administrative and medical care delivery components and
systems available through the Plan as necessary for the Plan
to provide or arrange for the provision of Covered Services to
those Program eligible Members who receive coverage through
the Plan.
1.2 THE PROGRAM. "The Program" shall mean the State of Texas
STAR+PLUS Program for the provision of medical, dental,
vision, behavioral, approved home and community based, and
other health services to Medicaid recipients in a managed care
delivery setting as described in the STAR+PLUS portion of the
Request For Application by the Texas Department of Health,
dated January 7, 1997.
1.3 COVERED SERVICES. "Covered Services" shall mean health care
services or products, including medical, dental, vision,
behavioral, approved home and community based care, and other
health services to which Members are entitled under the
Program as described in the TDH Request for Application dated
January 7, 1997. "Covered Services" shall also include all
value-added services as described in the Plan response dated
April 7, 1997 to the Texas Department of Health Request for
Application.
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1.4 IMPLEMENTATION DATE. "Implementation Date" shall mean the
later of (1) October 1, 1997 or (2) the date the Plan Program
becomes operational and the Plan is obligated to commence the
provision of Covered Services to Members.
1.5 PARTICIPATING PROVIDER. "Participating Provider" shall mean a
duly licensed (if subject to licensure) physician, hospital,
health professional, facility, and other health care provider
that have entered into a contract with the Plan for the
provision of Covered Services to Members.
1.6 PRE-OPERATIONAL PHASE. "Pre-Operational Phase" shall mean the
period beginning May 7, 1997 and ending on the Implementation
Date.
1.7 REQUEST FOR APPLICATION ("RFA"). "RFA" or "Request for
Application" shall mean the TDH/TDHS Request for Application
for the Program dated January 7, 1997 and any amendments
thereto.
1.8 RECIPIENTS OR MEMBERS. "Recipients" or "Members" shall mean
those individuals who are eligible for coverage under the
Program and who have enrolled in the Plan.
1.9 TDH. "TDH" shall mean the Texas Department of Health, an
agency, division or department of State government responsible
for administration of its State Medicaid Program pursuant to
Title XIX of the Social Security Act and applicable State law.
1.10 TDHS. "TDHS" shall mean the Texas Department of Human
Services, an agency, division or department of State
government responsible for administration of its State
Medicaid Program pursuant to Title XIX of the Social Security
Act and applicable state law.
1.11 TDI. "TDI" shall mean the Texas Department of Insurance.
1.12 MEDICAL EXPENDITURES. "Medical Expenditures" shall mean all
expenses for Covered Services incurred in a specific contract
year and paid during the specific contract year and up to 120
days after the end of the contract year.
1.13 MEDICAL BUDGET. "Medical Budget" shall mean an accounting
process whereby a gross amount of funds is set aside by Plan
to cover costs associated with medically necessary covered
services for Members of the Plan.
1.14 STATE. "State" shall mean the State of Texas.
2. LIFEMARK RESPONSIBILITIES: INSURANCE REQUIREMENTS
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2.1 PRE-OPERATIONAL PHASE.
2.1.1 GENERALLY. On behalf of, and after consulting with
the Plan, Lifemark shall respond in a timely manner
to TDHS requests for additional information or
clarification of the terms of the RFA and shall
provide assistance and support to the Plan in its
negotiations with TDHS concerning the Program.
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2.1.2 SPECIFIC PRE-OPERATIONAL DUTIES. Pre-operational
duties are those activities that are performed by
Lifemark on behalf of the Plan during the
Pre-Operational Phase of this Agreement. Services
performed during the Pre-Operational Phase in many
instances will extend beyond the Implementation Date
as necessary to conduct day to day operations of the
Plan. In consideration of the reimbursement of all
pre-operational costs in accordance with Section 3.1
of this Agreement, during the Pre-Operational Phase,
Lifemark shall assist the Plan with the establishment
of the following services.
2.1.2.1 Location of an office site and in selection
of office equipment;
2.1.2.2 Installation of computer hardware, software
and related equipment;
2.1.2.3 Staff selection and training;
2.1.2.4 Development of marketing programs if
directed by the Plan;
2.1.2.5 Development of Plan policy and procedures;
2.1.2.6 Provider network development, including
negotiating, credentialing, and contracting;
2.1.2.7 Education of participating providers and
their staff regarding Plan programs;
2.1.2.8 Establishment of utilization and quality
assurance programs;
2.1.2.9 In coordination with the Plan, act as a
liaison with TDHS and assist in the
negotiation of contracts;
2.1.2.10 Preparation of member handbooks;
2.1.2.11 Preparation of provider handbooks; and
2.1.2.12 Obtain necessary State of Texas Third Party
Administrator (TPA) and/or Utilization
Review Agent (UR) licenses.
2.2 OPERATIONAL PHASE ADMINISTRATIVE SERVICES. Lifemark shall
provide the following administrative and management services
necessary to the Plan:
2.2.1 GENERAL MANAGEMENT DUTIES. Lifemark shall be
responsible for the day-to-day operational management
of the Plan as it relates to the Program consistent
with and in compliance with the provisions of this
Agreement, the RFA, and any contract between TDHS and
the Plan. All amendments to the contract between the
Plan and TDHS that relate to the provision of
administrative services, including requirements for
information services, shall be incorporated into this
agreement and Lifemark shall carry out such
requirements following reasonable written notice from
Plan.
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2.2.2 CONTRACTING WITH PROVIDERS. Lifemark shall assist the
Plan in recruiting, negotiating, and contracting on
behalf of the Plan with providers of medical, dental,
vision, behavioral and other health services to
provide Covered Services to Members as required by
the contract between TDHS and the Plan. Provider
contracts shall be between the Plan and the
Participating Providers.
All contracts with Participating Providers shall be
in a form and contain such provisions as are
acceptable to the Plan, set forth the method and
amount of reimbursement to Participating Providers,
and specify that the Participating Providers shall be
subject to all requirements contained in the RFA, any
contract between TDHS and the Plan, and all
applicable provisions of this Agreement.
2.2.3 CLAIMS PROCESSING AND PAYMENT. Lifemark shall pay
claims to Participating Providers for all approved
Covered Services rendered to Members in accordance
with the contracts entered into between Participating
Providers and the Plan, the RFA, any contract between
TDHS and the Plan, and this Agreement. Lifemark shall
have the authority and discretion to interpret the
requirements of the RFA, the contract between TDHS
and the Plan, and the contracts between the Plan
and providers with respect to payment of claims
to Participating Providers. Claims payments shall
be made by checks or drafts signed by Lifemark as the
Plan's dispersing agent out of the account
established in accordance with Section 2.2.4 hereof,
and Lifemark shall provide the Plan with a copy of
all check registers for claims payment checks.
Lifemark shall notify the Plan by facsimile or
electronic transmission within the greater of
forty-eight (48) hours or two (2) business days
prior to releasing a check from such account in an
amount equal to or greater than [x]*. The Plan
shall not unreasonably withhold its approval of
such expenditure, and, the Plan shall provide a
written explanation to Lifemark of any disapproval
of such an expenditure. The Plan's failure to
disapprove the issuance of such check within the
notice period shall be deemed to be approval of the
issuance.
2.2.4 BANK ACCOUNT; ACCOUNTING AND FINANCE DUTIES. Two
separate bank accounts shall be established and
controlled by the Plan. The first shall be a control
depository account ("CDA")for premium deposits from
TDHS. The second account will be a Zero Balance
Account ("ZBA") used solely for disbursements
initiated by Lifemark for payment of Covered Services
and Lifemark administrative services fees. Lifemark
shall be responsible for performing all day to day
financial and accounting functions of the Plan,
including preparation of financial statements,
accounts payable/receivable administration, and
banking arrangements. Lifemark shall provide the
Plan with monthly financial statements and support.
It is understood that during the first six months
of operations certain data may not be available to
conduct comprehensive financial and operational
analyses. Lifemark shall prepare for the Plan's
review, signature and submission, any financial and
regulatory reports required by TDHS or TDH in
connection with the Program and/or the Texas
Department of Insurance. The Plan agrees to transfer
and maintain sufficient funds in the ZBA to meet all
Plan obligations as presented. Under no circumstances
is Lifemark required to expend Lifemark's own funds
to pay claims.
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2.2.5 PLAN BENEFITS LITIGATION. If a demand is asserted or
a litigation/arbitration proceeding is commenced
("Plan Benefits Litigation") by a Member or health
care provider to recover benefits against Lifemark,
the Plan or both parties, the following shall apply:
2.2.5.1 If either Lifemark or the Plan becomes aware
of the asserted Plan Benefits Litigation, it
shall promptly notify the other party. The
Plan shall, with Lifemark's advice and
input, determine whether to pay the disputed
claims or proceed with Plan Benefits
Litigation.
2.2.5.2 In the event the Plan determines to
proceed with Plan Benefits Litigation, the
Plan shall retain counsel and direct the
response to the Plan Benefits Litigation.
The Plan shall be responsible for assuming
the cost attributable to Plan Benefits
Litigation. Lifemark shall fully cooperate
with such Plan Benefits Litigation.
2.2.6 COORDINATION OF BENEFITS; THIRD PARTY LIABILITIES;
REINSURANCE. Lifemark shall be responsible for the
following activities in connection with coordination
of benefits and third-party recoveries as required
under the provisions of the RFA and under any
contract between TDHS and the Plan:
2.2.6.1 Recovering or coordinating medical expenses
incurred by Members from all third-party
liability resources on behalf of the Plan
and depositing any amounts recovered in the
Plan's designated bank account;
2.2.6.2 Establishing and maintaining files of
Members' third-party liability information;
2.2.6.3 Receiving third-party liability information
from TDHS and updating the Members' files on
a timely basis;
2.2.6.4 Informing TDHS and the Plan of third-party
liability information discovered during the
course of business operations;
2.2.6.5 Providing TDHS and the Plan with required
reports relating to amounts recovered from
third-parties;
2.2.6.6 Recovering reinsurance revenues payable to
the Plan from TDHS and/or other reinsurers.
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2.2.7 CASE MANAGEMENT. Lifemark shall be responsible for
performing case management services in accordance
with the RFA and in accordance with the contract
between TDHS and the Plan. Lifemark shall ensure
that each Member has chosen or is assigned a
primary care provider who shall assess the Member's
health care needs and shall provide services to
meet those needs either directly or through
referrals to other Participating Providers. Lifemark
shall implement a system for the directing,
coordinating, monitoring and tracking of the Covered
Services rendered to each Member.
2.2.8 FACILITATION OF SERVICES. Lifemark shall provide the
Plan and Participating Providers with Member
enrollment and eligibility information letter and
maintain telephone lines as required by the contract
with TDHS for the purpose of determining enrollment
and eligibility information upon admission to an
emergency facility or hospital emergency room.
2.2.9 PROGRAM COVERAGE INFORMATION. Lifemark shall prepare
and forward to all Participating Providers a summary
of Covered Services including schedules of Covered
Service and applicable exclusions or limitations
thereto, and applicable co-payments, co-insurance and
deductibles.
2.2.10 QUALITY ASSURANCE. Lifemark shall be responsible for
developing and maintaining a Quality Assurance
Program in compliance with the requirements of the
RFA, and with any contract between TDHS and the Plan.
2.2.11 UTILIZATION MANAGEMENT. Lifemark shall be responsible
for developing and maintaining a Utilization
Management Program in compliance with the
requirements of the RFA, and with any contract
between TDHS and the Plan. The Utilization
Management Program shall determine whether the
level, type, and cost of benefits provided are
appropriate to the health care needs of Members on
an ongoing basis.
2.2.12 CREDENTIALING. Lifemark shall be responsible for the
process of credentialing and recredentialing each
Participating Provider in accordance with applicable
Plan policies and procedures.
2.2.13 INFORMATION SYSTEMS.
2.2.13.1 Lifemark shall develop and maintain as of
the Implementation Date an automated
management information system as required by
the contract with TDHS, any contract between
TDHS and the Plan, and this Agreement.
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2.2.13.2 The parties acknowledge that Lifemark will
use its proprietary software program,
Managed Care One, which includes all
documentation thereof and amendments and
revisions thereto, as the information system
implemented pursuant to this Agreement. The
program, source and object codes and
databases, the trade secrets related
thereto, the copy right of Managed Care One,
the trademark of the name, all intellectual
property rights associated with the program,
the technical information, design concepts,
processes, formulae and algorithms and all
other rights and aspects pertaining thereto
are highly confidential and the exclusive
property of Lifemark. Nothing in this
Agreement shall be construed to be an
assignment, transfer, purchase, lease or
license of such rights. Lifemark is using
Managed Care One strictly for its own
purposes in fulfilling its duties under this
Agreement and may elect at any time in its
sole discretion to use a different
information system; provided however that no
disruption of Plan Program functions will
result from such decision. The Plan
acknowledges that certain features of
Managed Care One are highly confidential and
proprietary and agrees, even after the
termination of this Agreement, to maintain
the strict confidentiality of all
information obtained about all of the above
described aspects and all features of the
program, regardless of how such information
was obtained, until such information becomes
public information. The Plan waives all
claim, right or interest whatsoever in
Managed Care One, or any of the above
described aspects and features thereof, and
all amendments or revisions thereto.
2.2.13.3 All data entered into Managed Care One after
the Implementation Date and until the
termination of this Agreement that pertain
to the Plan Program, is owned by the Plan
and Lifemark shall provide such data to the
Plan upon request of the Plan. In the event
the contract between Lifemark and the Plan
is terminated, within five (5) working days
thereafter, such data will be transferred to
the Plan by Lifemark using industry standard
electronic media. The Plan shall be entitled
to no other information from Managed Care
One.
2.2.14 REPORTS TO AND LIAISON WITH TDHS AND TDI. Lifemark
shall be responsible for making reports to TDHS and
TDI and the Plan which are required by contract with
TDHS and to act as a liaison to TDHS for the general
purpose of regulatory compliance. Reports shall be
made at such times as are required by TDHS and TDI
and such report shall be in format acceptable to TDHS
and TDI. Lifemark shall furnish copies of such
reports to the Plan contemporaneously with submission
to TDHS and TDI.
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2.2.15 REPORTS TO THE PLAN. Lifemark shall report to the
designated Plan executive on a regular basis and at
such times as are reasonably requested. Lifemark
shall report to the designated Plan executive on any
and all matters relating to the administration of the
Plan Program. Lifemark shall provide reasonable
advance notice to the Plan of any meeting with TDHS,
TDI or other State regulatory personnel so as to
allow a Plan representative to attend the meeting in
person or by teleconference. If either party is
unable to attend the meeting, the other party agrees
to fully inform the other of the information gained
or decisions made.
2.2.16 MEMBER SERVICES. Lifemark shall be responsible for
providing all Member services and functions as are
required by the RFA, any and all contracts between
TDHS and the Plan, and this Agreement, including a
Member call center for STAR and STAR+PLUS if required
by the contract between TDHS/TDH and the Plan.
2.2.17 COMPLAINT RESOLUTION PROCEDURE. Lifemark shall
maintain a complaint resolution procedure to process
Member and provider complaints.
2.2.18 PROVIDER AND MEMBER SATISFACTION. Lifemark shall
administer periodically, but not less frequently than
annually, Participating Provider and Member
satisfaction surveys as required by TDHS.
2.2.19 INSURANCE REQUIREMENTS.
2.2.19.1 PROFESSIONAL LIABILITY INSURANCE. During the
term of this Agreement, the Plan shall
maintain, at its sole expense, a policy of
HMO-type professional liability insurance
acceptable to Lifemark with coverage limits
in the minimum amount of $1,000,000 per
incident and $3,000,000 in the annual
aggregate. In addition, the Plan shall
purchase a "tail policy" with the same
policy limits following the effective date
of termination of the foregoing policy in
the event the policy is a "claims made"
policy. Lifemark at its own expense shall
obtain a professional liability insurance
policy acceptable to the Plan with coverage
limits in the minimum amount of $1,000,000
per incident and $3,000,000 in the annual
aggregate for Lifemark employees for such
items as credentialing, care coordination
and utilization review related activities.
2.2.19.2 COMPREHENSIVE LIABILITY INSURANCE. Lifemark
and the Plan each shall maintain, at the
sole expense of each, throughout the term of
this Agreement, a policy of general
liability insurance, with terms and
conditions acceptable to the other party in
the minimum amount of $1,000,000 per
occurrence and $3,000,000 in the annual
aggregate.
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2.2.19.3 PROOF OF INSURANCE. Each party shall furnish
the other with evidence of such insurance,
including certificates of insurance and
complete copies of insurance policies, upon
the other's request. Each party shall
provide the other with a minimum of 30 days
prior written notice in the event any of the
insurance policies required by this
Agreement are canceled, materially changed
or restricted in any way.
2.2.20 MEDICAL DIRECTOR. Lifemark shall provide the
equivalent of a full-time medical director licensed
by the Texas State Board of Medical Examiners for the
STAR and STAR+PLUS programs. Lifemark must have a
written job description for the medical director who
shall perform such duties as are required by TDHS
in its contract with the Plan. If the medical
director's time spent on these duties exceeds
a standard full-time equivalent Lifemark employee,
then such excess time shall be charged to the STAR
program. The medical director must exercise
independent medical judgment in all medical necessity
decisions. Lifemark must ensure that medical
necessity decisions are not adversely influenced by
fiscal management decisions. Lifemark acknowledges
that the Plan and agencies of the State of Texas may
conduct reviews of medical necessity decisions by
the medical director at any time.
3. REVENUE, ACCOUNTS AND ADMINISTRATIVE FEES
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3.1 PRE-OPERATIONAL PHASE ADVANCE. The Plan shall pay Lifemark an
amount equal [x]* as an advance for services provided to the
Plan related to pre-operational activities. Payment will be
made in three equal installments with the first payment due to
Lifemark no later than May 15, 1997. Subsequent payments will
be due no later than June 15, 1997 and August 15, 1997
respectively.
3.2 REIMBURSEMENT FOR PRE-OPERATIONAL PHASE. The Plan will pay
Lifemark an amount equal [x]* in connection with
pre-operational activities during each month of the
Pre-Operational Phase. After the advance funds described in
Section 3.1 have been applied, any remaining amount due shall
be PAID TO LIFEMARK NO LATER THAN THE 15TH day of the
following month. Lifemark will provide Plan with a detailed
listing of actual expenses incurred.
3.3 OPERATIONAL PHASE. Lifemark shall be paid an Administrative
Fee following the Implementation Date as set forth in Exhibit
A of this Agreement.
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Lifemark will estimate and be paid the monthly Administrative
Fee before the fifteenth day of the month. Any adjustments
based on the actual membership figures will be made to the
subsequent months payment. Lifemark will produce a monthly
Administrative Services Fee Reconciliation Report setting
forth estimated payment of that month and reconciliation for
prior periods. In no event shall the total Administrative Fee
paid to Lifemark in any contract year [x]* of that contract
year's Revenue (as defined below).
In return for receiving the Administrative Fee, Lifemark shall
be responsible for all costs associated with the
administration of the Plan Program, except for the following
expenses, which shall be the responsibility of the Plan:
3.3.1 Claims costs for Covered Services;
3.3.2 Legal services of the Plan;
3.3.3 Actuarial services of the Plan;
3.3.4 All insurance premiums for the Plan;
3.3.5 Board fees and expenses related to Board meetings;
3.3.6 Expenses relating to the corporate existence of the
Plan;
3.3.7 Audit and tax services of the Plan;
3.3.8 Advertising and marketing expenses of the Plan;
3.3.9 Any income, property, premium or other taxes of the
Plan and any assessments or license fees;
3.3.10 Other expenses clearly related to the business of the
Plan as an independent corporate entity;
3.3.11 Costs associated, including preparation of proposals,
for the expansion of the Plan into additional service
areas.
3.4 PERFORMANCE FEE/PERFORMANCE PENALTY. At least annually, Plan
and Lifemark shall determine a set of performance goals and
objectives for Lifemark and the performance of its duties
under this agreement. Such goals and objectives may include,
among other things, the reduction of HMO administrative and
similar expenditures from budgeted targets or the achievement
of other Plan Program operating efficiencies. Based on
Lifemark' achievement of specified goals and objectives,
Lifemark shall be paid a performance fee (the "Performance
Fee"). The Performance Fee shall be paid as set out in Exhibit
B of this Agreement. Under certain instances as described in
Exhibit B, Lifemark may be subject to a Penalty (the
"Performance Penalty"). Any Performance Penalty shall be
offset against Lifemark' base Administrative Fee paid by Plan
as provided under Section 3.3 and Exhibit A of this Agreement
and under the terms as set forth in EXHIBIT B. THE
MINIMUM/MAXIMUM amount of any Performance Fee and the
Performance Penalty shall in no instance exceed [x]* by the
Plan in a given contract year commencing on the Implementation
Date. This Section 3.4 shall be null and void upon Plan
entering into a risk sharing arrangement with Lifemark of
Texas, Inc. and the assignment of this Agreement to Lifemark
of Texas, Inc.
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3.5 REVENUE AND ACCOUNTS.
3.5.1 PROGRAM CONTRACT YEAR 2000. For the Partial Program
contract year beginning December 1, 1999 and ending
August 31, 2000, the Plan shall deposit [x]* of
Revenue into the CDA, and the remaining [x]* of
Revenue into an account designated by Plan to pay for
Plan's oversight, reinsurance and recovery of initial
Plan Program start-up costs. "Revenue" means the
monthly payments and all subsequent adjustment
payments, made to the Plan by TDHS under the Program
contract.
3.5.2 PROGRAM CONTRACT YEAR 2001. For the Program contract
year beginning September 1, 2000 and ending August
31, 2001, the Plan shall deposit [x]* of Revenue into
the CDA, and the remaining [x]* of Revenue into an
account designated by Plan to pay for Plan's
oversight, reinsurance and recovery of initial Plan
Program start-up costs.
3.5.3 PROGRAM CONTRACT YEAR 2002. If this Agreement is
extended for Program contract year beginning
September 1, 2001 and ending August 31, 2002, the
Plan shall deposit [x]* of Revenue into the CDA, and
the remaining [x]* of Revenue into an account
designated by Plan to pay for Plan's oversight,
reinsurance and recovery of initial Plan Program
start-up costs.
3.5.4 PROGRAM YEAR 2003. If this Agreement is extended for
the Program contract year beginning September 1, 2002
and ending August 31, 2003, the parties shall agree
as part of such extension as to the division of the
Revenue.
4. TERM AND TERMINATION
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4.1 TERM. This Agreement shall be effective on December 1, 1999,
or the first day of the month following TDHS approval of this
Agreement if TDHS must approve the effective date, though it
may be finally executed and delivered on a subsequent date.
The Agreement shall be effective during the period necessary
to complete the Plan's preoperational activities and shall
then be in full force and effect through August 31, 2001.
The parties may extend the Agreement by mutual written
agreement for additional one (1) year periods, not to exceed
two (2) extensions. Each such extension shall be effective on
September 1, or the effective date of the contract year
between TDHS and the Plan. If a party does not desire to
extend this Agreement, such party must provide the other party
at least one hundred twenty (120) days written notice prior
to the expiration of the current term. Such extensions of
this Agreement shall be of no force and effect if TDHS and
Plan do not agree to a Program contract for the extension
periods of this Agreement.
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4.2 TERMINATION. This Agreement may be terminated upon the
following:
4.2.1 At any time upon the written mutual consent of both
parties.
4.2.2 Either party may terminate this Agreement for a
material breach or upon the failure of either party
to obtain and maintain any license, registration or
approval required under state or federal law that is
material to the operation of the Plan Program which
has not been cured within 30 days after the "Cure
Period". The Cure Period is defined as sixty (60)
days from the date on which one party receives notice
of a material breach from the other party. Provided
however, if the material breach involves failure to
pay Administrative Fees when due, the Cure Period
shall be (10) days.
4.2.3 In the event the contract between TDHS and the Plan
is terminated for any reason or the Plan's
participation in the Program is otherwise terminated,
in which case termination shall be effective as of
the termination date of the Plan's participation in
the Program.
4.2.4 Immediately upon the filing of a bankruptcy petition
by either party.
4.3 OBLIGATIONS IN EVENT OF TERMINATION.
4.3.1 Upon termination of this Agreement for reasons other
than those described in Section 4.2.2 of this
Agreement, the Plan shall purchase those fixed
assets and leasehold improvements acquired and used
by Lifemark to administer the Plan at a price equal
to the book value of such assets as determined by
Lifemark at the termination date. Lifemark shall use
Generally Accepted Accounting Principles (GAAP) for
depreciation of fixed assets and leasehold
improvements. The Plan shall also agree to assume
and/or be fully financially responsible for any
lease of office space or equipment being utilized
for Plan operations and to indemnify Lifemark
against any liability therefor. The purpose of this
reimbursemen is to allow the recovery of those costs
normally covered over the life of a contract.
4.3.2 In the event of termination of this Agreement for any
reason, Lifemark shall fully cooperate with the
person or entity selected by the Plan to assume
administration of the Plan.
4.3.3 In the event of termination of this Agreement,
Lifemark shall provide the Plan with all copies of
records in Lifemark' possession directly and
specifically relating to the Plan Program and which
are necessary for the continued operation of the Plan
Program, or shall forward such records to a successor
administrator as directed by the Plan.
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4.3.4 If this Agreement is terminated by the Plan for
reasons other than those stated in Section 4.2.2
within one year of the Implementation Date, the Plan
will reimburse Lifemark for [x]* of all Program
related expenses incurred by Lifemark.
4.3.5 Upon termination of this Agreement for any reason,
Lifemark, at Plan's option, shall continue to
adjudicate all incurred claims that had not been paid
as of the termination date. Plan shall pay Lifemark a
fee of [x]* of the paid claim amount for each claim
adjudicated. Lifemark shall have no obligation to
expend its own funds to adjudicate such claims, but
shall deliver such claims to the Plan pursuant to
the Plan's instructions. Lifemark shall have no
obligation to adjudicate claims incurred after the
termination date of this Agreement.
4.4 NOTICE OF WITHDRAWAL. If the Plan determines to withdraw from
or limits involvement in the Program, the Plan shall give
Lifemark ninety (90) days prior written notice. To "withdraw"
shall mean an action by the Plan to terminate the contract
with TDHS, or the Plan's failure or decision not to extend or
renew the TDHS contract. To "limit involvement" shall mean an
action by Plan not to expand its service area in the Program
if the Plan is presented such an opportunity. The Plan agrees
that if Plan withdraws or limits its involvement in the
Program, Lifemark may pursue such opportunity independently of
the Plan.
5. MISCELLANEOUS
5.1 CONFIDENTIALITY. Lifemark agrees to safeguard the
confidentiality of all data pertaining to this Agreement and
Covered Services rendered to Members in accordance with TDHS
requirements.
5.2 RELATIONSHIP OF THE PARTIES. In the performance of the work,
duties and obligations of the parties pursuant to this
Agreement, the parties shall, at all times, be acting and
performing as independent contractors. No relationship of
employer and employee, or partners or joint venturers created
by this Agreement, and neither party may therefore, make any
claim against the other party for social security benefits,
workers' compensation benefits, unemployment insurance
benefits, vacation pay, sick leave or any other employee
benefit of any kind. In addition, neither party shall have any
power or authority to act for or on behalf of, or to bind the
other except as herein expressly granted, and no other or
greater power or authority shall be implied by the grant or
denial of power or authority specifically mentioned herein.
13
5.3 ASSIGNMENT/SUBCONTRACTING. Neither party shall have the right
to assign, delegate or subcontract any of its rights or
obligations hereunder without the prior written consent of the
other party. The parties agree that this Agreement may be
assigned at any time by Plan to Lifemark of Texas, Inc.
5.4 NOTICES. Except as set forth herein, all notices require or
permitted to be given hereunder, shall be in writing and shall
be sent by United States mail, certified or registered, return
receipt requested, postage prepaid, to the parties hereto at
their respective addresses set forth on
the signature page hereto, or such other address as may be
fixed in accordance with the provisions hereof. Except as set
forth herein, if mailed in accordance with the provisions of
this paragraph, such notice shall be deemed to be received
three (3) business days after mailing.
5.5 HEADINGS. The headings of the various sections of this
Agreement are inserted merely for the purpose of convenience
and do not expressly or by implication limit, define or extend
the specific terms of the section so designated.
5.6 WAIVER OF BREACH. The waiver by either party of a breach or
violation of any provision of this Agreement shall not operate
as, nor be construed to be, a waiver of any subsequent breach
thereof.
5.7 APPLICABLE LAW. This Agreement shall be governed in all
respects by the laws of the State of Texas.
5.8 INVALID PROVISIONS. If, for any reason, any provision of
this Agreement is or shall be hereafter determined by law,
act, decision, or regulation of a duly constituted body or
authority, to be in any respect invalid, such determination
shall not nullify any of the other terms and provisions of
this Agreement and, unless otherwise agreed to in writing by
the parties, then, in order to prevent the invalidity of such
provision or provisions of this Agreement, the said provision
or provisions shall be deemed automatically amended in such
respect as may be necessary to conform this entire Agreement
with such applicable law, act, decision, rule or regulation.
5.9 NO THIRD-PARTY BENEFICIARY. This Agreement is entered into by
and between the Plan and Lifemark and for their benefit. There
is not intent by either party to create or establish
third-party beneficiary status or rights or their equivalent
in any Member, subcontractor, or other third party, and no
such third party shall have any right to enforce any right or
enjoy any benefit created or established under this Agreement.
14
5.10 COMPLAINT AND APPEAL PROCESS. In the event that any dispute
relating to this Agreement arises between Lifemark and Plan,
the parties will make a good faith effort to resolve the
dispute informally. If the dispute cannot be resolved
informally, Lifemark must submit a written complaint to Plan
which clearly states the basis of the complaint and a proposed
resolution. Plan shall respond to a written complaint within
thirty (30) days of receipt, either accepting, rejecting, or
modifying Lifemark's proposed resolution. This will be Plan's
final determination. If the parties are unable to resolve the
dispute through the complaint process, the dispute shall be
resolved by binding arbitration in accordance with the Rules
of Commercial Arbitration of the American Arbitration
Association. In no event may the arbitration be initiated more
than one year after the date one party first gave written
notice of the dispute to the other party. The arbitration
shall be held in Dallas, Texas or in such other location as
the parties may mutually agree upon. The arbitrator shall have
no power to award punitive or exemplary damages or vary the
terms of this Agreement and shall be bound by controlling law.
5.11 REVIEW AND AUDIT. Lifemark will at all times make available
for review and audit by either the Plan or its designee its
files, books, procedures and records (including computer
terminal access to same) pertaining to the Plan Program or the
services provided by Lifemark under this Agreement. In
addition, Lifemark shall make available for interview with the
auditor those personnel with material involvement or
responsibility with respect to the services provided by
Lifemark under this Agreement.
5.12 ENTIRE AGREEMENT: AMENDMENT. This Agreement and all exhibits
hereto shall constitute the entire agreement relating to the
subject matter hereof between the parties hereto, and
supersedes all other agreements, written or oral, relating to
the subject matter hereof. This Agreement may be amended by
mutual agreement of the parties, provided that such amendment
is reduced to writing and signed by both parties.
5.13 EXHIBITS. Any exhibits attached to this Agreement are an
integral part of this Agreement and are incorporated herein by
reference.
5.14 TEXAS DEPARTMENT OF INSURANCE. The parties acknowledge and
agree that this Agreement is subject to review and approval by
TDI and TDHS.
5.15 PLAN INSOLVENCY. Lifemark understands and agrees that Plan has
the sole responsibility for payment of services rendered by
Lifemark under this Agreement. In the event of Plan insolvency
or cessation of operations, Lifemark' sole recourse shall be
against Plan through the bankruptcy or receivership estate of
Plan. Lifemark understands and agrees that neither the State
of Texas nor the Plan Member is liable or responsible for
payment for any services provided under this Agreement.
5.16 MODIFICATION TO AGREEMENT. Lifemark agrees that any
modification, addition, or deletion of the provisions to this
Agreement will become effective no earlier than thirty (30)
days after Plan notifies the TDHS of the change. If TDHS does
not provide written approval within thirty (30) days from
receipt of notification from the Plan such changes may be
considered provisionally approved.
15
5.17 FRAUD AND ABUSE. This Agreement and Lifemark are subject to
state and federal fraud and abuse statutes. Lifemark will be
required to cooperate in the investigation and prosecution of
any suspected fraud or abuse, and must provide any and all
requested originals and copies of records and information,
free of charge, on request, to any state or federal agency
with authority to investigate fraud and abuse in the Medicaid
program.
5.18 FUNDING. Lifemark understands that services provided under
this contract are funded by State and federal funds under
the Texas Medical Assistance Program (Medicaid). Lifemark
is subject to all State and federal laws, rules and
regulations that apply to persons or entities receiving State
and federal funds. Lifemark understands that any violation
by Lifemark of a State or federal law relating to the delivery
of services under this contract, or any violation of the
TDHS/HMO contract could result in liability for contract money
damages, and/or civil and criminal penalties and sanctions
under State and federal law.
6. RIGHT OF FIRST REFUSAL. The Plan hereby grants a right of first
refusal to Lifemark to be the administrative services manager if Plan
expands its service area in the Program. Further, the Plan hereby
grants a right of first refusal to Lifemark or its affiliates,
including but not limited to, Lifemark of Texas, Inc., to enter into an
arrangement of equal sharing of medical risk in the Program, or any
other form of relationship in which such risk is shared equally by the
parties. The parties agree to negotiate with each other in good faith
as to the allocation of start-up expenses and administrative services
fees related to the expansion. If the Plan declines to pursue the
expansion, Lifemark may pursue the opportunity independently of the
Plan.
7. NON-COMPETE. During the term of this Agreement, Lifemark may not
compete with Plan in the Program, or enter into a contract with an
entity that competes with Plan in the Program without obtaining Plan's
prior written consent; provided, however, this restrictive covenant
does not apply to service area expansion in the Program which the Plan
has declined or failed to pursue. Except as set forth above, the Plan
and Lifemark may pursue independently of each other business
opportunities which are unrelated to the Program.
16
8. SETTLEMENT OF PERFORMANCE FEE. Plan agrees to pay Lifemark the sum of
$600,000.00 ("Settlement Amount") in full and final settlement of the
Performance Fee from the Implementation Date through and including
November 30, 1999. Lifemark accepts the Settlement Amount and does
completely and generally release, remise, and forever discharge Plan
from any and all claims for Performance Fee for such time period. This
release shall become effective and binding upon: a) the execution of
this Agreement, and b) the receipt of the Performance Fee by Lifemark.
Plan shall pay the Performance Fee within thirty (30) days of the
assignment of this Agreement to Lifemark of Texas, Inc.
9. PARTIAL PAYMENT OF PERFORMANCE FEE. Within 30 days from the execution
hereof Plan agrees to pay the sum of $600,000 as an initial payment
against the amount finally determined to be owed to Lifemark as a
Performance Fee for the period from the Implementation Date through and
including November 30, 1999. The parties anticipate the final amount of
the Performance Fee to be settled as Managed Care Financial Statistical
Reports are filed with TDHS for the relevant time periods.
IN WITNESS WHEREOF, the parties have executed this Agreement to be
effective as of the day and year first set forth above.
RIO GRANDE HMO, INC.
BY: /S/ XXXXX X. XXXX ITS VICE PRESIDENT
--------------------------------
Xxxxx X. Xxxx
DATE: JANUARY 19, 2000
ADDRESS FOR NOTICES:
000 X. Xxxxxxx Xxxxxxxxxx
Xxxxxxxxxx, Xxxxx 00000
LIFEMARK CORPORATION
BY: /S/ XXXXXXX XXXXXXX ITS VICE PRESIDENT
--------------------------------
DATE: JANUARY 19, 2000
ADDRESS FOR NOTICES:
0000 XXXXX 00XX Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
17
EXHIBIT A
ADMINISTRATIVE FEE SCHEDULE
RIO GRANDE HMO - XXXXXX COUNTY, TEXAS
EFFECTIVE DECEMBER 1, 1999
ABD / SSI MANAGEMENT FEE SCHEDULE FOR MEMBERS DETERMINED BY TDHS AS "OTHER
COMMUNITY CLIENTS (DUAL ELIGIBLE AND MEDICAID ONLY, COMBINED)"
Tier Membership Fees
The Greater of:
I. First [x]* [x]* PMPM or [x]*
II. Next [x]* [x]* PMPM or [x]*
III. Members in Excess of [x]* [x]* PMPM or [x]*
If membership for ABD lives falls below [x]* members, Plan will reimburse
Lifemark Texas at its [x]* per month. This maximum reimbursement amount applies
to ABC/SSI and LTC, combined, if both groups are under the minimum memberships
for the month. Costs will be determined by allocating total costs based on
membership. For allocation purposes, [x]* member will equal [x]* members.
LTC MANAGEMENT FEE SCHEDULE FOR ALL OTHER MEMBER RISK GROUPS COMBINED
Tier Membership Fees
The Greater of:
I. First [x]* [x]* PMPM or [x]*
II. Next [x]* [x]* PMPM or [x]*
III. Members in Excess of [x]* [x]* PMPM or [x]*
If membership for [x]* lives falls below [x]* members, Plan will reimburse
Lifemark Texas at its [x]* per month. This maximum reimbursement amount applies
to ABC/SSI and LTC, combined, if both groups are under the minimum memberships
for the month. Costs will be determined by allocating total costs based on
membership. For allocation purposes, [x]* member will equal [x]* members.
18
Lifemark Texas shall be paid the following Administrative Fees in addition to
the Base Fees above:
CONTRACT YEAR ADDITIONAL ADMINISTRATIVE FEE
(% of Revenue)
12/01/99 - 08/31/00 [x]*
09/01/00 - 08/31/01 [x]*
09/01/01 - 08/31/02 (if extended) [x]*
09/01/02 - 08/31/03 (if extended) (Subject to negotiation)
19
EXHIBIT B
PERFORMANCE GOALS AND OBJECTIVES
I. After 120 days but before 180 days after the end of each of the
periods, the first of which beginning January 1, 1998 through
December 31, 1998, and the next period beginning January 1, 1999
through November 30, 1999 ("Performance Goal Periods"), Plan will
calculate the Performance Fee/Penalty. Plan will set a gross medical
budget which is defined as the sum of the products of the per member
per month (pmpm) medical cost target times the actual member months
for each category. The pmpm medical cost targets for FY 1998 are shown
in Exhibit C and will be updated annually. In the event that Medical
Expenditures fall below [x]* of the gross medical budget, Plan will pay
Lifemark a Performance Fee in the amount equal to [x]* by Plan for the
next contract month, then Lifemark may elect to pay the Performance
Penalty to up to twelve (12) equal monthly installments.
II. In the event that Plan incurs financial penalties imposed by TDH, TDHS
or the Texas Department of Insurance with respect to the operation of
the Plan Program and is a direct result of the failure of Lifemark to
fulfill its duties under this Agreement, Plan will pay such penalties
from its own funds, but may deduct the amount of such penalties from
Lifemark' Administrative Fee; provided however, the amount of the
deduction shall not exceed [x]*.
III. This Exhibit B shall be null and void if Lifemark of Texas, Inc. and
Plan have entered into a risk sharing arrangement and this Agreement
has been assigned to Lifemark of Texas, Inc.
20
EXHIBIT C
PER MEMBER PER MONTH MEDICAL COST BUDGET TARGETS FOR
FY 1998 - OCTOBER 1, 1997 THROUGH AUGUST 31, 1998.
CBA Waiver - Dual Eligible [x]*
CBA Waiver - Medicaid Only [x]*
Other Community Clients- Dual Eligible [x]*
Other Community Clients - Medicaid Only [x]*
New Nursing Facility Clients (MAO) - Dual Eligible [x]*
New Nursing Facility Clients (MAO) - Medicaid Only [x]*
Voluntary Nursing Facility Clients - Dual Eligible [x]*
Voluntary Nursing Facility Clients - Medicaid Only [x]*
In the event that Plan capitation rates from TDHS are supplemented, modified or
changed, Plan and Lifemark agree to review medical cost targets as described in
this Exhibit.
* CONFIDENTIAL TREATMENT REQUESTED
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