"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."
1993 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. Attachment A5, HOSPITAL CONTROL PROGRAM, is amended as follows:
Section 2, BUDGET, is amended in part as follows pursuant to Exhibit 1,
attached hereto and incorporated herein by this reference.
Section 4, CALCULATION OF SAVINGS AND LOSSES, is amended in full pursuant
to Exhibit 2, attached hereto and incorporated herein by this reference.
2. Attachment E, PHARMACY CONTROL PROGRAM, is amended in full as follows:
See Exhibit 3, attached hereto and incorporated herein by this reference.
3. Attachment F, AIDS STOP LOSS PROGRAM, is amended in full as follows:
See Exhibit 4, attached hereto and incorporated herein by this reference.
The effective date of this Amendment is January 1, 1993.
By signing below, both parties hereto have executed and agreed to this
Amendment.
PACIFICARE, INC. IPA Santa Xxx-Tustin
Physician's Grp. Inc.
By: /s/ Xxxxx Xxxxxxx By: /s/ Xxxxxx X. Xxxxx
------------------------------ --------------------------
Xxxxx Xxxxxxx
Vice President
DATE: 1/14/93 DATE: 12/23/92
---------------------------- --------------------------
1
EXHIBIT 1
ATTACHMENT A5
HOSPITAL CONTROL PROGRAM
2. BUDGET
DOLLARS $PMPM
-------------
Inpatient Hospital $[ ** ]
Utilization Rate 215 days PTMPY
Perdiems, net of discounts:
Regular Plans [ ** ]
Co-Pay Plans [ ** ]
[ ** ]
Emergency Room and Ambulance Services [ ** ]
Outpatient Surgery and other Services [ ** ]
Selected OP Services from Capitation [ ** ]
(Chemotherapy, Dialysis, home health etc)
Urgent Care Center Agreement (if applicable) [ ** ]
Hospital Control Program Payout Pool [ ** ]
-------
SUB-TOTAL [ ** ]
Reinsurance Program Deductible [ ** ] [ ** ]
Coinsurance [ ** ]
-------
TOTAL BUDGET PMPM [ ** ]
-------
-------
2
EXHIBIT 2
ATTACHMENT A5
1993-HOSPITAL CONTROL PROGRAM
4. CALCULATION OF SAVINGS AND LOSSES
The inpatient hospital component of the budget is stated assuming [ ** ] of
Subscribers enroll in benefit plans with hospital copayment/coinsurance/
deductible obligations for inpatient services ("Co-Pay Plans"). It is also
assumed that [ ** ] of Subscribers enroll in non-Co-Pay Plans ("Regular
Plans"). The earned budget will be adjusted to reflect the actual number of
Subscribers who enroll in the Co-Pay Plans and Regular Plans based upon
PacifiCare's Member Month Moving Analysis Report for the period (MB0530). The
MB0530 Report is a report that reflects actual eligible Subscribers by
benefit plan for the period, as adjusted for retroactive eligibility
terminations and additions reported during the period as of the report's run
date. Therefore, the actual earned budget may be greater or less than the net
budget indicated in this Attachment A-5.
3
EXHIBIT 3
ATTACHMENT E
1993 PHARMACY CONTROL PROGRAM
The purpose of the Pharmacy Control Program (PCP) is to provide incentive to the
IPA to xxxxxx the efficient utilization of prescription services. The IPA is
given the opportunity to share in savings realized by IPA maintaining or
improving specific utilization goals outlined below.
GENERIC PERCENTAGE INCENTIVE - The Pharmacy Control Program shall be indexed
to PacifiCare's 1992 calendar year network baseline generic drug utilization
percentage, which shall be adjusted to reflect brand name drugs going
off-patent in 1993. For every percentage point IPA exceeds PacifiCare's
[ ** ] PacifiCare shall pay IPA an amount per member per month in
accordance with the following prescription utilization rate scale:
PRESCRIPTION UTILIZATION RATE
(RX/MEM/YR) *
GREATER THAN
PAYOUT FACTOR PMPM OR EQUAL TO LESS THAN
-------------------- -------------- ----------
[ ** ] [ ** ] - [ ** ]
[ ** ] [ ** ] - [ ** ]
[ ** ] [ ** ] - [ ** ]
[ ** ] [ ** ] - [ ** ]
[ ** ] [ ** ] - [ ** ]
[ ** ] [ ** ] -
(*) [ ** ]
[ ** ]
FORMULARY BONUS - If IPA qualifies for a generic percentage rate payment as
outlined above, a bonus payment of [ ** ] shall be paid for every [ ** ]
IPA's formulary utilization percentage rate exceeds [ ** ] up to a maximum
of [ ** ]. [ ** ].
4
(1993 PHARMACY CONTROL PROGRAM CONTINUED)
IPA agrees to participate in a generic substitution and formulary program
established by PacifiCare's Formulary Advisory Committee.
UTILIZATION AND CALCULATION REPORTS
PacifiCare shall provide quarterly utilization reports showing IPA's generic
percentage, prescription rate and formulary percentage along with a
comparison to [ ** ]. PacifiCare shall provide semi-annual Pharmacy Control
Program calculations and incentive payments. The first payment shall be for
the six months ending June 30, 1993 and shall be paid within sixty days of
this date. The final calculation and incentive payment shall be cumulative
for the twelve months ending December 31, 1993 and shall be paid within one
hundred twenty days of year end.
In the event that IPA receives a semi-annual incentive payment that is greater
than the cumulative twelve month calculated amount, PacifiCare shall be due a
refund of the difference.
5
EXHIBIT 4
ATTACHMENT F
1993 AIDS STOP LOSS PROGRAM
PacifiCare agrees to provide additional financial protection to IPA for the cost
of Medical Services rendered to Subscribers who have AIDS. Subscribers who are
eligible for this program are as follows:
Subscribers who are admitted to a hospital or referred to home health care
for the treatment of an opportunistic infection and have been diagnosed
with clinical AIDS.
Once PacifiCare's Medical Services Department has verified that a Subscriber
meets the definition above, further expenses for Medical Services associated
with the Subscriber's AIDS care will be paid by PacifiCare as defined by Cost of
Care in Attachment A4 hereto. To receive reimbursement, IPA must submit a Stop
Loss claim to PacifiCare indicating the date the Subscriber became eligible for
the AIDS Stop Loss Program and the expenses incurred on behalf of the Subscriber
after the effective date. IPA may include claims under the AIDS Stop Loss
Program commencing on the date the Subscriber was admitted to the hospital, or
on the date home health care was provided the Subscriber, pursuant to the
eligibility criteria noted above. Expenses for Medical Services pertaining to
AIDS care rendered from January 1, 1993 through December 31, 1993 only will be
included in the AIDS Stop Loss Program. A final claim must be filed for such
Medical Services by March 31, 1994 to be included in this AIDS Stop Loss
Program.
All claims submitted for consideration under the AIDS Stop Loss Program must be
processed and coordinated in a confidential manner. Inquiries for determining
such procedures should be directed to PacifiCare's Medical Director.
6
