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EXHIBIT 10.4
THIRD AMENDMENT
TO
RISK SHARING AGREEMENT
BY AND BETWEEN
ALLEGHENY HEALTH, EDUCATION & RESEARCH FOUNDATION
AND
COVENTRY CORPORATION
ON BEHALF OF MEMBER COMPANIES
THIS AGREEMENT is executed the ______ day of JULY 1997, by and between
HealthAmerica Pennsylvania, Inc., a Pennsylvania corporation licensed to operate
a health maintenance organization ("HealthAmerica"), Coventry Corporation, a
Delaware corporation ("Coventry") for and on behalf of the Member Companies (as
hereinafter defined) other than HealthAmerica, and Allegheny Health, Education
and Research Foundation, a Pennsylvania nonprofit corporation ("AHERF").
WHEREAS, HealthAmerica and Coventry entered into a Risk Sharing Agreement with
AHERF on March 31, 1997; and
WHEREAS, on June 11, 1997 HealthAmerica and Coventry entered into a First
Amendment to Risk Sharing Agreement with AHERF; and
WHEREAS, on June 30, 1997 HealthAmerica and Coventry and Coventry Health Plan of
West Virginia, Inc. d/b/a HealthAssurance HMO entered into a Second Amendment to
Risk Sharing Agreement with AHERF; and
WHEREAS, the parties to said Agreement desire to further amend said Agreement to
incorporate additional compliance language in order to comport with certain
regulatory requirements of the state of West Virginia.
NOW, THEREFORE, in consideration of the mutual covenants, premises and
undertakings herein and intending to be legally bound hereby, the parties agree
as follows:
1. Incorporation of Amendments. To the extent not modified by this Third
Amendment, the Second Amendment, First Amendment and Risk Sharing Agreement
are incorporated herein by reference.
2. Section 3, Duties of AHERF, shall be expanded, specifically for purposes of
compliance with West Virginia Code Section 114-43-1 et seq, as it relates
to West Virginia HMO, to add the following terms and conditions:
3.1.11 AHERF shall adhere to all quality and accessibility
standards to which West Virginia HMO is subject. Further,
to the extent AHERF subcontracts for the provision of
health care services it is agreed that all subcontractors
must adhere
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to the quality and accessibility standards to which West
Virginia HMO is subject.
3.1.12 AHERF shall maintain records which are adequate to
clearly differentiate the transactions which relate to the
provision of health care services on behalf of West
Virginia HMO.
3.1.13 AHERF and any Contracted Providers with which it
contracts for the provision of health care services shall
obtain and provide to West Virginia HMO no later than the
first day of June of each year an annual audited financial
report prepared by an independent certified public
accountant.
3.1.14 AHERF will only provide services on behalf of West
Virginia HMO in counties where West Virginia HMO is
authorized to operate by the West Virginia Department of
Insurance.
3.1.15 AHERF shall maintain working capital in the form of
cash or equivalent liquid assets at least equal to one
month's claims calculated by using the monthly average of
actual and estimated claims for the prior six months for
all health services provided under the Agreement.
3.1.16 AHERF shall create a segregated fund, which may be
aggregated, equal to the entire monthly IBNR as of the
first day of each month as actuarially determined by West
Virginia HMO.
3. Section 4 DUTIES OF HEALTHAMERICA/WEST VIRGINIA HMO, shall be expanded,
specifically for purposes of compliance with West Virginia Code Section
114-43-1 et. seq., as it relates to West Virginia HMO, to add the following
terms and conditions:
4.1.10 West Virginia HMO shall be responsible for maintaining
appropriate levels of capital, surplus, claims reserves and other financial
criteria as established pursuant to statute or rule.
4.1.11 All Covered Individuals or Covered Individual group
contracts will be entered into directly with West Virginia HMO and
specifically not with AHERF.
4. Section 5.9, NO BALANCE BILLING, shall be amended to read in its entirety
as follows:
"AHERF hereby agrees, on behalf of itself and its Affiliated
and Contracted Providers, that in no event, including but not
limited to, non-payment by a Member Company, a Member Company
insolvency or breach of the Agreement, shall AHERF xxxx,
charge or collect a deposit from, seek compensation,
remuneration or reimbursement from, or have any recourse
against, Covered Individuals or persons other than a Member
Company acting on their behalf for Covered Services. This
Section shall not prohibit collection of Copayments,
Coinsurance, Deductibles or Financial Penalties made in
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accordance with the terms of the applicable Covered
Individual's contract with a Member Company nor billing for
non-Covered Service for which Covered Individuals have had
prior notification and approved.
"AHERF further agrees that: (i) the no balance billing
provision herein shall survive the termination of the
Agreement regardless of the cause giving rise to termination
and shall be construed to be for the benefit of Covered
Individuals; and (ii) this no balance billing provision
supersedes any oral or written contrary Agreement now existing
or hereafter entered between AHERF and a Covered Individual or
a person acting on his/her behalf.
"Any modification, addition or deletion to the provisions of
this Section shall become effective on a date no earlier that
sixty (60) days after the Pennsylvania Secretary of Health and
the requisite governmental body of the State of Ohio and the
State of West Virginia, have received written notice of such
proposed change."
5. Section 5.11 of the Risk Sharing Agreement is intentionally deleted for
purposes of West Virginia HMO.
6. Section 22, GOVERNING LAW, shall be amended to read in its entirety as
follows:
"This Agreement shall be governed by the laws of the
Commonwealth of Pennsylvania as it in any way pertains to
HealthAmerica Pennsylvania, Inc., the State of Ohio as it in
any way pertains to HealthAmerica Pennsylvania, Inc. d/b/a
HealthAssurance HMO, and the State of West Virginia as the
Agreement in any way pertains to Coventry Health Plan of West
Virginia, Inc. Any actions, lawsuit or claim brought by either
party pertaining to breach, reformation or interpretation of
this Agreement as it relates to HealthAmerica Pennsylvania,
Inc. shall be exclusively brought in Pittsburgh,
Pennsylvania."
7. EFFECTIVE DATE. The effective date of this Agreement for purposes of West
Virginia HMO shall be July 1, 1997.
8. ALL OTHER TERMS. Notwithstanding anything contained herein, all other terms
of the Agreement and the First and Second Amendments shall remain unaltered
and in full force and effect.
[REST OF PAGE INTENTIONALLY BLANK]
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the day
and year first above written.
Allegheny Health, Education HealthAmerica Pennsylvania, Inc.
& Research Foundation
/s/ Xxxxx X. XxXxxxxxx
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Xxxxx X. XxXxxxxxx Xxxxxx X. Xxxxx
Executive Vice President and President and Chief Executive Officer
Chief Financial Officer
Coventry Corporation
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Xxxxxx X. Xxxxx
Senior Vice President
HealthAmerica Pennsylvania, Inc. d/b/a
HealthAssurance HMO
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By:
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Title:
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Coventry Health Plan of West Virginia, Inc.
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By:
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Title:
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