"ALL SECTIONS MARKED WITH TWO ASTERISKS ("**") REFLECT PORTIONS WHICH HAVE
BEEN REDACTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION BY PROSPECT MEDICAL HOLDINGS, INC. AS PART OF A REQUEST FOR
CONFIDENTIAL TREATMENT."
AMENDMENT TO
IPA COMMERCIAL SERVICES AGREEMENT
The undersigned parties to the PacifiCare IPA Commercial Services Agreement
between PacifiCare of California ("PacifiCare") and Santa Xxx-Tustin
Physicians' Group, Inc. ("IPA") do hereby amend said Agreement as follows:
1. Paragraph 3.02 is amended to read as follows: (3.02.01 and 3.02.02 shall
remain as written):
3.02 STANDARDS - All Health Care Services arranged for or provided by
IPA and its Member Physicians shall be provided by professional personnel and
at physical facilities according to generally accepted standards of medical
practice and management in the community. IPA further agrees to provide or
arrange for referrals to consultants and Specialist Physicians and facilities
as are necessary, appropriate, and in accordance with generally accepted
standards of medical practice in the community and in compliance with the
standards developed by PacifiCare's Quality Assurance Committee. IPA agrees
to maintain and demonstrate to PacifiCare upon request, throughout the term
of this Agreement, compliance with the following:
2. Paragraph 3.14 is amended in full to read as follows:
3.14 QUALITY OF HEALTH CARE SERVICES - IPA agrees to assure quality of
Health Care Services by:
3.14.01 Assigning PacifiCare Subscribers only to Member Physicians
or Outside Providers meeting quality health care standards;
3.14.02 Inspecting the premises and facilities of its Member
Physicians on a regular basis and allowing PacifiCare to participate in such
inspections upon ten (10) days written notice.
3.14.03 Utilizing the PacifiCare Quality Assurance Committee's
guidelines for physician credentialling.
3. Attachment A3 "INDIVIDUAL STOP LOSS" shall be amended to add Section (4)
which will read as follows:
4.00 AUDIT - Upon request by PacifiCare, IPA shall provide PacifiCare
with claims information and other supporting records, including medical
records, contracts with Specialist Physicians, and payment documentation for
claims paid to Specialist Physicians or other providers, related to specific
Individual Stop Loss claims. Such information may be requested by PacifiCare
on a retrospective basis after the Individual Stop Loss payment has been made
to IPA.
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4. Attachment A5 "HOSPITAL CONTROL PROGRAM" Section (2) "BUDGET" shall be
amended in full as follows:
See Exhibit 1, attached here to and incorporated herein by this
reference.
5. Attachment A5 "HOSPITAL CONTROL PROGRAM" sliding scale risk sharing
schedule (as contained in Section 4 "CALCULATION OF SAVINGS AND LOSSES")
shall be amended in full as follows:
See Exhibit 2, attached hereto and incorporated herein by this
reference.
6. Attachment C "CAPITATION PAYMENT RATES" shall be amended as follows:
The percentage of premium value for Individual Stop Loss (as noted in
the second sentence of the first paragraph) shall be equal to:
[ ** ]
7. Attachment E "PHARMACY CONTROL PROGRAM" shall be amended in full to read
as follows:
See Exhibit 3, attached hereto and incorporated herein by this reference.
8. Attachment F "AIDS STOP LOSS PROGRAM" will apply during 1991. IPA
acknowledges that final claims must be filed for such services by March 31,
1992 to be included in the AIDS Stop Loss Program.
9. Attachment H "DIVISION OF FINANCIAL RESPONSIBILITY" shall be amended as
follows:
[ ** ]
[ ** ]
2
The effective date of this Amendment shall be January 1, 1991.
By signing below, both parties hereto have executed and agreed to this
Amendment.
PACIFICARE OF CALIFORNIA IPA Santa Xxx-Tustin
Physicians' Gr. Inc
By: /s/ Xxxxx X. Xxxxx By: /s/ Xxxxxx X. Xxxxx
------------------------------ ------------------------------
Xxxxx X. Xxxxx, Vice President Title: President
-----------------------------
Date: 02/01/91 Date: 1/20/91
---------------------------- ------------------------------
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EXHIBIT 1
HOSPITAL, CONTROL PROGRAM BUDGET
DOLLARS PMPM
Inpatient Hospital [ ** ]
Utilization Rate 215 days PTMPY
Per Diems, net of discounts, etc.
Regular Plans [ ** ]
880 Plan [ ** ]
[ ** ]
Emergency Services [ ** ]
Emergency Room & Ambulance
(See Special Conditions below)
Outpatient Services [ ** ]
Outpatient Surgery and other hospital
outpatient services as approved by
Pacificare (i.e., facility fees for
outpatient dialysis)
Selected Outpatient Services from Capitation [ ** ]
Chemotherapy Administration (including drugs)
Professional Charges for Dialysis
Home health services expenses as approved
by Pacificare in advance
Hospital Control Program Payout Pool [ ** ]
--------
SUB-TOTAL [ ** ]
Reinsurance Premium
Deductible PMPY [ ** ] [ ** ]
TOTAL BUDGET PMPM [ ** ]
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The TOTAL BUDGET PMPM to be used for settlement purposes shall be calculated
by applying the IPA's specific composite age/sex factor to the budgeted
amounts for Inpatient Hospital, Emergency Services, Outpatient Services, and
Selected Outpatient Services. (The composite age/sex factor will be
calculated by multiplying the IPA's member months within each age/sex
category and dividing the sum of these numbers by IPA's total member months.
The age/sex categories and factors are listed below.) The age/sex adjusted
dollar figure will be added to the Hospital Control Program Payout Pool
dollar figure. The Reinsurance premium will be netted against this figure.
AGE/SEX AGE/SEX
CATEGORY FACTOR
-------- ------
Child, Age 0-1 [ ** ]
Child, Age 2-9 [ ** ]
Child, Age 10-17 [ ** ]
Female, Age 18-29 [ ** ]
Female, Age 30-44 [ ** ]
Female, Age 45-64 [ ** ]
Female, Age 65+ [ ** ]
Male, Age 18-29 [ ** ]
Male, Age 30-44 [ ** ]
Male, Age 45-64 [ ** ]
Male, Age 65+ [ ** ]
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EXHIBIT 2
HOSPITAL CONTROL PROGRAM SLIDING SCALE SCHEDULE
Bed Days/Outpt. Surgery
Per Thousand Mbrs/Year IPA % Sharing
---------------------- -------------
Over 269 [ ** ]
245-269 [ ** ]
220-244 [ ** ]
under 220 [ ** ]
(Payment to remain as stated in Agreement.)
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EXHIBIT 3
ATTACHMENT E
PHARMACY CONTROL PROGRAM
The purpose of the Pharmacy Control Program (PCP) is to provide an
incentive to the IPA to xxxxxx the efficient utilization of prescription
services. The IPA is given the opportunity to share in [ ** ] of any savings
when per member per month expenses are compared to budget, with a limited
amount of commensurate downside risk.
I. BUDGET
The budget will be set at the following amounts on a per Subscriber per month
(pmpm) basis and will be calculated based on the mix of copay plans of
Subscribers who have designated IPA as their Participating Medical Group:
Plan Type Budget Amount
--------- -------------
$0 copay [ ** ]
$1 copay [ ** ]
$2 copay [ ** ]
$2.50 copay [ ** ]
$3 copay [ ** ]
$4 copay [ ** ]
$5 copay [ ** ]
$6 copay [ ** ]
$7 copay [ ** ]
Debited against this budget will be the actual expenses paid by PacifiCare
for pharmacy services of those Subscribers which designated IPA as their
Participating Medical Group for the applicable month.
II. RISK SHARING FORMULA
The IPA will share [ ** ] of any savings in comparing the budget
and actual expenses.
The IPA will be responsible for [ ** ] of any dollar amounts
more than [ ** ] over the composite per member per month budget
figure.
PacifiCare shall provide, on a quarterly basis, utilization reports
pertaining to the cost of prescriptions written on a physician specific basis
and a year-to-date comparison of performance to budget. A final calculation
and final payment will be made within one hundred fifty (150) days of the end
of each year.
IPA agrees to participate in a generic drug substitution program and
formulary program established by PacifiCare's Quality Assurance Committee.
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