EXHIBIT 10.5
SERVICES AGREEMENT
THIS SERVICES AGREEMENT (the "Agreement") is entered into as of July 1, 1998 by
and between Xxxx Atlantic Corporation, with an address of 000 Xxxx 00xx Xxxxxx,
Xxx Xxxx, XX 00000, ("Xxxx Atlantic"), and Network Management Services, Inc.,
with an address of 0000 Xxxxxxx Xxxxxxxxx, Xxxxx 0000, Xxxxxxxxxxx, XX 00000-
1241 ("NMS").
RECITALS
WHEREAS, Xxxx Atlantic desires to retain NMS to provide certain administrative
and other services for certain Participant benefit plans maintained by Xxxx
Atlantic; and
WHEREAS, NMS desires to provide such services on the terms and conditions set
forth in this Agreement;
NOW THEREFORE, in consideration of the foregoing and the mutual promises
contained herein, and subject to the terms and conditions set forth below, NMS
and Xxxx Atlantic hereby agree as follows:
ARTICLE 1. CERTAIN DEFINITIONS
-------------------------------
As used in this Agreement, the following terms shall have the following
meanings:
"BEN-NET(TM)" shall mean NMS' proprietary technology services software program,
which provides certain benefit plan services and includes the following
features: group set-up, Vendor set-up, enrollment management, enrollment data
edits, eligibility distribution to Vendors, retroactive enrollment adjustments,
payments to Vendors, and COBRA and other direct individual billing
administration.
"Participant" shall mean an individual identified by Xxxx Atlantic as being
eligible to participate in one or more of Xxxx Atlantic's Plans. A Participant
includes both primary subscribers and their eligible dependents.
"Plan" or "Plans" shall mean any of the Participant benefit plans of Xxxx
Atlantic with respect to which NMS provides services, as described in Appendix A
to this Agreement or any amendment or supplement thereto.
"Vendor" shall mean a licensed organization authorized to provide or arrange for
health care or other welfare services for Participants that has contracted with
Xxxx Atlantic, including health maintenance organizations, preferred provider
organizations, pharmacy benefits managers, indemnity insurance organizations,
third-party administrators, mental health/substance abuse service
organizations, short- and long-term disability managers, life insurance
organizations, retiree plan administrators, flexible benefit administrators and
employee assistance program administrators.
ARTICLE 2. NMS RESPONSIBILITIES
---------------------------------
During the term of this Agreement:
2.1. NMS will be responsible for ensuring that all services are rendered as
described in Appendix A to this Agreement.
2.2. NMS will be responsible for the performance standards as described in
Appendix B to this Agreement.
2.3. NMS will maintain all appropriate regulatory approvals necessary to
provide the services specified in this Agreement. NMS will promptly
notify Xxxx Atlantic of the commencement of any disciplinary proceeding
against it or any of its principal officers relating to any state or
federal health care regulation.
2.4. NMS will be responsible for the overall management of Xxxx Atlantic's
Vendors relating to communicating eligibility, enrollment, financial and
performance data between Xxxx Atlantic and the Vendors.
2.5. NMS will provide to the Vendors summaries and detailed enrollment and
premium payment information on an agreed upon basis, including full
retroactivity data according to Xxxx Atlantic and Vendor payment rules.
2.6. NMS will provide a customer service telephone number for use by Xxxx
Atlantic, the Vendors and Participants between 7:00 a.m. and 4:00 p.m.
(Central Time) each business day and between 7:00 a.m. and 7:00 p.m.
(Central Time) on Thursday during open enrollment. The number will be
staffed with personnel trained to answer eligibility, premium and
service fee payment, invoice and status questions relating to Plans.
2.7. NMS will promptly respond to all inquiries from Xxxx Atlantic and the
Vendors regarding eligibility, premium, service fees, invoice and status
questions. NMS will promptly refer inquiries not related to its duties
under this Agreement (e.g., coverage issues) to the appropriate Vendor
or to Xxxx Atlantic and Xxxx Atlantic will direct Participants to call
such Vendor or Xxxx Atlantic regarding all such inquiries.
2.8. NMS will be the primary contact for most Vendor issues and will promptly
respond to all inquiries from Vendors, whether directly from the Vendor
or Xxxx Atlantic, regarding the status of enrollees, billing, receipt
and disbursement of premiums, and reconciliation issues. NMS shall
promptly notify Xxxx Atlantic of any concerns or problems identified by
a Vendor.
2.9. NMS will send to Xxxx Atlantic (via facsimile or other means) an invoice
that provides a detailed account of the payments to be made to the
Vendors and NMS. Xxxx Atlantic shall review the invoice and contact NMS
to resolve questions with respect thereto. NMS will endeavor to respond
to such inquiries within one business day. Based on such invoice, Xxxx
Atlantic will then notify NMS of the amounts to be withdrawn from the
fiduciary account(s) for transmission to the following parties: (a) the
Vendors for premiums or ASO fees or claims payments due, and (b) NMS for
administrative fees due. Payments to Vendors and NMS shall be made via
electronic transfer to the account designated by each party. Premiums
and other service fees shall be billed monthly, while claims funding
requests submitted by Vendors shall be billed weekly.
2.10. NMS will utilize the BEN-NET(TM) system for performing its obligations
under this Agreement. NMS hereby represents that such system will be
fully capable of performing all systems functions necessary to fulfill
NMS' responsibilities under this Agreement. NMS shall be solely
responsible for the upkeep and maintenance of the BEN-NET(TM) system.
2.11 NMS will release system enhancements that can be used as a standard
feature of BEN-NET(TM) across clients at no charge. Xxxx Atlantic will
be fully responsible for the cost, if approved in advance by Xxxx
Atlantic, of enhancements that are made to accommodate the unique
requirements of Xxxx Atlantic operations and that are generally not to
be incorporated into BEN-NET(TM) as standard features to be used by
other clients of NMS
ARTICLE 3. XXXX ATLANTIC RESPONSIBILITIES
--------------------------------------------
During the term of this Agreement:
3.1. Xxxx Atlantic, or its designee, will supply to NMS, according to a
mutually agreed to schedule, regular updates relating to Participant's
selection of Vendors and other information required to perform services
as described in Appendix A. If Xxxx Atlantic does not transmit data in a
timely fashion or sends incomplete or inaccurate data, Xxxx Atlantic
agrees and acknowledges that NMS may not be able to administer its
services in complete conformity to the terms of this Agreement.
3.2. Xxxx Atlantic will respond to inquiries from NMS, relating to
administering the services described in this Agreement, in a timely and
complete fashion that will allow NMS to fulfill its obligations
contained herein.
3.3. Xxxx Atlantic shall reasonably communicate to Participants instructions
for completing enrollment forms and otherwise communicating with NMS.
Xxxx Atlantic shall comply with reasonable NMS requests to
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improve Xxxx Atlantic's communication with its Participants and its
general human resource policies that affect the administrative services
provided by NMS hereunder.
3.4. Xxxx Atlantic will execute all requests for fund transfers from NMS to
Vendors and NMS within 24 hours unless, in the Xxxx Atlantic's
reasonable opinion, the request is materially inaccurate or incomplete.
3.5. Xxxx Atlantic, not NMS, will pay any late payment or reinstatement fees
levied by Vendors against Xxxx Atlantic or NMS relating to improper or
late payment of premiums, service fees or claims funding requests.
3.6 Xxxx Atlantic shall reimburse NMS for services rendered hereunder
according to the fees set forth in Appendix A of this Agreement and also
subject to the following:
A. Fees and expenses for routine administrative services, including
Participant enrollment, distribution of enrollment data to
Vendors, payment of fees and reconciliation of payment to
Vendors, and customer service and general program management,
will be immediately and fully payable to NMS on a monthly basis
at the time Xxxx Atlantic reimburses Vendors.
B. Fees and expenses not reimbursed to NMS on a regular monthly
basis, including consulting services and special projects, are
due to NMS 30 days after the invoice date.
X. Xxxx Atlantic will reimburse NMS for all approved travel related
expense, including airfare, ground transportation and hotel and
meal expenses. Expense reimbursements are due to NMS 30 days
after the invoice date.
D. All bank charges imposed in connection with the establishment and
maintenance of bank accounts in connection with this Agreement
shall be paid by Xxxx Atlantic.
E. All costs for printing, mailing or overnight delivery relating to
the distribution of information to Xxxx Atlantic, Participants or
Vendors are the sole responsibility of Xxxx Atlantic unless
otherwise described in Appendix A.
ARTICLE 4. INDEMNIFICATION, INSURANCE AND FIDUCIARY STATUS
-----------------------------------------------------------
4.1 Indemnification by NMS. NMS agrees to indemnify and hold harmless Xxxx
Atlantic and its officers, agents, directors and employees, against any
and all claims, actions, proceedings, penalties, expenses, damages,
liabilities and losses (including any governmental investigations,
complaints and actions) and reasonable attorneys' fees with respect
thereto, arising out of or in connection with (1) any breach of this
Agreement by NMS, including its representations, warranties and
covenants, (2) any claim or action involving product liability claims
arising from or relating to the design or use of BEN-NET(TM) or other
software or intellectual property provided by NMS to Participants, Plans
or Vendors, including any enhancements, upgrades or supplements to BEN-
NET(TM), such other software or such other intellectual property, (3)
any claim or action arising from or relating to the gross negligence or
wilful misconduct of NMS and (4) any use of NMS's software, written
material or other intellectual property by Xxxx Atlantic as permitted
herein.
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4.2 Indemnification by Xxxx Atlantic. Xxxx Atlantic agrees to indemnify and
hold harmless NMS, including its officers, agents, directors and
employees, against any and all claims, actions, proceedings, penalties,
expenses, damages, liabilities and losses (including any governmental
investigations, complaints and actions) and reasonable attorneys' fees
with respect thereto, resulting solely, directly and independent of all
other causes from (1) any material breach of this Agreement by Xxxx
Atlantic, including its representations, warranties and covenants, (2)
the improper payment or late payment of premiums, service fees or claims
funding requests, (3) the gross negligence or wilful misconduct of Xxxx
Atlantic and (4) any use of Xxxx Atlantic's software, written material
or other intellectual property by NMS as permitted herein.
4.3 Insurance. During the term of this Agreement, NMS shall maintain in
force the following insurance coverage:
A. Workers' Compensation insurance as required by the State(s) in
which the service is to be performed.
B. Employer's Liability insurance with limits of not less than ***
per occurrence.
C. Commercial General Liability Insurance, on an occurrence basis,
including but not limited to (premises-operations, broad form
property damage, contractual liability, independent contractors,
personal injury) with limits of at *** combined single limit for
each occurrence.
D. Commercial Automobile Liability, on an occurrence basis with
limits not less than ***
E. Crime and Fidelity Coverage on an occurrence basis, with limits of
at least *** per occurrence.
F. Professional Liability, Errors and Omissions, with limits of not
less than *** per occurrence.
Upon Xxxx Atlantic's request, NMS shall provide certificates of
insurance evidencing the aforementioned coverages.
4.4 Fiduciary Status. Xxxx Atlantic and NMS acknowledge and agree that NMS
shall not be a fiduciary within the meaning of the Employee Retirement
Income Security Act of 1974, as amended, or any state or federal law
with respect to any Plan. NMS shall not have any discretion with respect
to the management or administration of any Plan or with respect to
determining or changing the rules or policies pertaining to eligibility
or entitlement of any Participant in any Plan to benefits under such
Plan. NMS also shall not have any control or authority with respect to
any assets of any Plan, including the investment or disposition thereof.
All discretion and control with respect to the terms, administration or
assets of any Plan shall remain with Xxxx Atlantic or with the named
fiduciaries under such Plan.
NMS shall not be responsible or liable for any claims decisions made by
Vendors based on eligibility information provided to Vendors by NMS. The
determination as to whether claims shall be paid under the Plan shall be
the responsibility of Xxxx Atlantic and Vendor in accordance with each
applicable Plan.
ARTICLE 5. TERM AND TERMINATION
--------------------------------
5.1. The term of this Agreement will be five years commencing on the
effective date hereof and thereafter Xxxx Atlantic may extend the term
for an additional twelve (12) month period by providing NMS with 120
days written notice of its intention to renew this Agreement.
5.2. In the event that NMS materially breaches the performance of any of its
obligations under this Agreement, Xxxx Atlantic shall provide notice to
NMS of such breach. NMS shall have 30 days to cure the breach. If the
breach is not cured within 30 days of the notice, Xxxx Atlantic may
immediately terminate this Agreement.
***Pursuant to Rule 406 of the Securities Act of 1933,as amended, confidential
portions of Exhibit 10.5 have been deleted and filed separately with the
Securities and Exchange Commission pursuant to a request for confidential
treatment.
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5.3. In the event that Xxxx Atlantic fails to perform its payment obligations
hereunder, NMS shall provide notice to Xxxx Atlantic of such failure.
Xxxx Atlantic shall have 30 days to cure the failure. If the failure is
not cured within 30 days of the notice, NMS may immediately terminate
this Agreement.
5.4. Notwithstanding the foregoing, either party may terminate this Agreement
at any time by giving notice in writing to the other party, which notice
shall be effective upon dispatch, should the other party file a petition
of any type as to its bankruptcy, be declared bankrupt, become
insolvent, make an assignment for the benefit of creditors, go into
liquidation or receivership, or otherwise lose legal control of its
business.
5.5. Termination without Cause. Xxxx Atlantic may, at its convenience and
without cause, at any time, terminate all or part of this Agreement by
giving NMS 180 calendar days prior written notice. NMS may terminate
this Agreement without cause by giving Xxxx Atlantic 180 calendar days
prior written notice. RESERVED -- In the event of termination without
cause of this Agreement prior to its expiration by Xxxx Atlantic under
this provision, Xxxx Atlantic shall pay to NMS, in addition to all other
amounts currently due to NMS for services performed and accepted by Xxxx
Atlantic hereunder, the remaining balance of all set-up, conversion and
implementation fees set forth below.
The total amount for set-up, conversion, and implementation fees which
is being absorbed by NMS, as an investment in this business, as part of
this Agreement is fixed at ***. This amount will be amortized by NMS on
a monthly basis over the sixty (60) months of the Agreement. Each month,
or part thereof, during which NMS continues to perform services under
this Agreement, NMS will decrease by 1.67% for each month or *** for
each month the amount of the set-up, conversion, and implementation fees
owed by Xxxx Atlantic upon termination of this Agreement (without
cause). In the event Xxxx Atlantic requests to terminate without cause,
Xxxx Atlantic agrees to pay the remaining unamortized balance as
immediately due and payable.
In the event NMS gives notice of early termination without cause the
remaining unamortized balance will be forfeited by NMS and is not
payable by Xxxx Atlantic. Furthermore, no such set-up, conversion, and
implementation fees shall be owed by Xxxx Atlantic in the event Xxxx
Atlantic terminates this Agreement for cause.
5.6. Obligations Upon Termination. Upon any termination or non-renewal of
this Agreement, each party shall deliver to the other party all data or
information (in whatever form or media decided by the delivering party)
that is owned or licensed to or was developed by the other and that was
supplied hereunder. Each party shall reimburse the other party for its
reasonable costs associated with such transfer. Furthermore, NMS shall
provide reasonable assistance to Xxxx Atlantic in the transfer of NMS'
obligations hereunder to a replacement service provider.
ARTICLE 6. CONFIDENTIALTY AND PROPERTY RIGHTS
----------------------------------------------
6.1. Confidential Information.
X. Xxxx Atlantic Information
--------------------------
Confidential. Any Xxxx Atlantic information furnished to NMS under
------------
this Agreement or that NMS comes in contact with on Xxxx Atlantic
premises or under Xxxx Atlantic control shall remain Xxxx Atlantic
property. All copies of such information in written, graphic or
other tangible form, and all Work Product derived from or
reflecting such information, shall be returned to Xxxx Atlantic at
its request, and in any event within thirty (30) days after the
expiration or termination of this Agreement. No copies shall be
made of any documents or other media provided by Xxxx Atlantic
without the prior written consent of Xxxx Atlantic. Unless such
information was previously known to NMS free of any obligation to
keep it confidential, or has been or is subsequently made public
by Xxxx Atlantic or a third party without breach of any agreement,
it shall be kept strictly confidential and shall be used only in
performing services under this Agreement, and may not be used for
other purposes except upon such terms as may be agreed upon
between NMS and Xxxx Atlantic in writing. NMS shall require all
parties accessing Xxxx Atlantic information including its
employees, agents and representatives to sign a separate written
agreement protecting Xxxx Atlantic information substantially in
the form of this provision .
***Pursaunt to Rule 406 of the Securities Act of 1933, as amended, confidential
portions of Exhibit 10.5 have been deleted and filed separately with the
Securities and Exchn Exchange Commission pursuant to a request for confidential
treatment
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B. NMS Information
Confidential. NMS Confidential Information shall include all
------------
information relating to the design and data storage components of BEN-
NET(TM) and any additional information disclosed by NMS (the
"Discloser") to Xxxx Atlantic (the "Recipient") in writing and marked
"Confidential" or disclosed visually or orally and confirmed in
writing to be confidential within 20 days after the first disclosure.
Confidential Information shall not, however, include the following:
i. Information which is now or hereafter comes into the public
domain through no fault of the Recipient;
ii. Information learned by the Recipient from third parties;
iii. Information previously known to the Recipient or developed by
the Recipient independently of information disclosed by the
Discloser; or
iv. Information required to be disclosed by Recipient pursuant to
requirements of law.
Confidential Treatment. The Recipient shall treat the NMS
----------------------
Confidential Information as confidential, using the same standard of
care that it uses to protect its own proprietary or confidential
information (but not less than a reasonable standard of care), and
shall use reasonable measures to prevent disclosure of the NMS
Confidential Information to any third party without the Discloser's
consent. The Recipient shall disclose the NMS Confidential
Information only to those of its Participants, agents or
subcontractors who have a reasonable need for access thereto.
Return of Information. All NMS Confidential Information shall remain
----------------------
the property of the Discloser. Upon the Discloser's request, the
Recipient shall promptly return the NMS Confidential Information,
provided, however, that the Recipient may retain copies solely for
archival purposes only.
6.2. NMS Intellectual Property. Nothing contained in this Agreement shall
confer to Xxxx Atlantic any property rights, proprietary interest or
licenses in the software, written materials, techniques or know-how used
by NMS and its BEN-NET(TM) system.
6.3. Non-Solicitation. For the term of this Agreement (including any renewal
term) and a period of one year thereafter, neither party shall in any way
solicit or employ directly or indirectly an employee of the other party
without the written consent of the other party.
ARTICLE 7. DISPUTE RESOLUTION
-----------------------------
7.1. Informal Management Mediation. Should any disagreement, dispute or claim
-----------------------------
of breach, nonperformance, or repudiation arise from, or in connection
with, this Agreement or any of the terms and conditions hereof
("Dispute") between Xxxx Atlantic and NMS either during this Agreement or
after termination of this Agreement, either party may give to the other
notice of the Dispute, specifically referencing this provision and
request resolution of the Dispute. At the expiration of ten (10) business
days, unless it shall have been settled, such Dispute may be referred by
either party to the Xxxx Atlantic Sourcing Director and Supplier
[Supplier's Contact] for resolution. The parties agree to exchange
relevant information and cooperate in good faith to resolve the Dispute
under this provision. If within an additional ten (10) business days,
such dispute shall not have been settled the parties shall have the right
to proceed under provision 7.3 below. The parties may also seek
injunctive relief to preserve the status quo pending resolution under
this provision or provision 7.3.
7.1. Settlement Purposes. ALL DISCUSSIONS AND DOCUMENTS PREPARED PURSUANT TO
-------------------
ANY ATTEMPT TO RESOLVE A DISPUTE THROUGH INFROMAL MANAGEMENT ESCALATION
ARE CONFIDENTIAL AND FOR SETTLEMENT PURPOSES ONLY AND SHALL NOT BE
ADMITTED IN ANY COURT OR OTHER FORUM AS AN ADMISSION OR
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OTHERWISE AGAINST A PARTY FOR ANY PURPOSE INCLUDING THE APPLICABILITY OF
FEDERAL AND STATE COURT RULES.
7.3. Before either party may proceed under this provision 7.3, the parties
must in good faith attempt to resolve their dispute through Informal
Management Mediation described above. Any dispute that cannot be resolved
through Informal Management Mediation shall be settled by arbitration in
accordance with the Commercial Arbitration Rules of the American
Arbitration Association ("AAA"), and judgment upon the award rendered by
the arbitrator(s) may be entered in any court having jurisdiction
thereof. The arbitration shall be held in New York, NY. The arbitration
will be conducted before a panel of three arbitrators, with one
arbitrator named by each party and the third named by the two party-
appointed arbitrators, or (if they should fail to agree on the third) by
the AAA. The arbitrators may not award non-monetary or equitable relief
of any sort. They shall have no power to award punitive damages or any
other damages not measured by the prevailing party's actual damages. All
aspects of the arbitration shall be treated as confidential. Neither the
parties nor the arbitrators may disclose the existence, content or
results of the arbitration, except as necessary to comply with legal or
regulatory requirements. Before making any such disclosure, a party shall
give written notice to all other parties and shall afford such parties a
reasonable opportunity to protect their interests.
ARTICLE 8. BOOKS AND RECORDS
-----------------------------
8.1. Xxxx Atlantic may audit the books and records of NMS pertaining to NMS'
services rendered hereunder no more than once every 18 months, upon
reasonable notice thereof to NMS. Such right to audit shall survive the
termination of this Agreement by six months. All audits shall be at Xxxx
Atlantic's expense.
8.2. NMS will make available for audit by either Xxxx Atlantic or its designee
("Auditor") its files, books, procedures and records (including computer
terminal access to same) pertaining to the services provided by NMS under
this Agreement during the hours of 9 a.m. to 5 p.m. (Central Time) ,
Monday through Friday, excluding holidays. NMS shall fully cooperate
with such audit and shall make available for interview with the Auditor
those personnel with material involvement or responsibility with respect
to the services provided by NMS under this Agreement. Xxxx Atlantic will
give NMS reasonable notice of each audit prior to commencement of the
audit. The audit shall be conducted at NMS' offices.
8.3. Notwithstanding anything herein to the contrary, in the event that the
Auditor is to be a designee of Xxxx Atlantic, Xxxx Atlantic must first
obtain the consent of NMS with respect to such designee, which consent
shall not be unreasonably withheld.
8.4. NMS shall have the opportunity, prior to the release of the audit report
resulting from the audit described above, to review the draft and to
include in the report its responses to issues raised by the report.
ARTICLE 9. NOTICES
-------------------
9.1. General. All notices, requests, demands and other communications required
to be given hereunder shall be in writing and shall be deemed to have
been duly given one day after delivery by hand or via a nationally
recognized overnight courier or five days after mailing, certified or
registered mail, return receipt requested to the party for whom intended
at the address specified in this Article. Either party may designate an
alternate address for notices by given written notice thereof in
accordance with the provisions of this Article.
9.2. Notices to NMS. All notices to NMS shall be directed as follows:
Network Management Services
0000 Xxxxxxx Xxxx., Xxxxx 0000
Xxxxxxxxxxx, XX 00000-0000
Attn: Chief Financial Officer
9.3. Notices to Xxxx Atlantic. All notices to client shall be directed as
follows:
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Xxxx Atlantic
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxx
ARTICLE 10. GENERAL PROVISIONS
-------------------------------
10.1. Control of Work. NMS shall be solely responsible for the conduct and
control of the work to be performed under this Agreement by NMS and its
agents or employees.
10.2. Applicable Law. This Agreement shall be governed and construed in
accordance with the laws of the State of New York without giving effect
to such State's choice of law rules.
10.3. Publicity. Each party shall obtain the prior written consent of the
other party concerning the content and plan of distribution of any
public announcement, press release or advertisement concerning this
Agreement, provided that NMS may include references to Xxxx Atlantic in
client lists, general press releases not specifically pertaining to Xxxx
Atlantic, proposals, and other non-public communications concerning NMS
or its services. No prior consent shall be required regarding the
inclusion of the other party's name in notices, disclosure documents, or
other filing or publications required by law or regulations.
10.4. Headings. Article and section headings are for convenience only and
shall not be considered part of the terms and conditions of this
Agreement.
10.5. Modification. No modification, waiver or amendment of any term or
condition of this Agreement shall be effective unless and until it shall
be reduced to writing and signed on behalf of NMS and Xxxx Atlantic.
10.6. Waiver. Failure by either party at any time to require full performance
by the other party or to claim a breach of any term of this Agreement
will not (1) be construed as a waiver of any right under this Agreement,
(2) affect any subsequent breach, or (3) affect the validity of this
Agreement or any part thereof.
10.7. Severability. Whenever possible, each provision of this Agreement will
be interpreted in such a manner as to be effective and valid under
application law but if any provision of this Agreement is held to be
invalid, illegal or unenforceable in any respect under any applicable
law or rule in any jurisdiction, such invalidity, illegality or
unenforceability will not affect any other provision as if such invalid,
illegal or unenforceable provision had never been contained herein.
10.8. Complete Agreement. The Agreement, including the appendices hereto,
constitutes the entire agreement between the parties with respect to the
subject matter hereof and supersedes all prior proposals, negotiations,
conversations, discussions and agreements between the parties. This
Agreement may be modified only by a written instrument executed on
behalf of both of the parties hereto.
10.9. Assignment. Neither party may assign any of its rights under this
Agreement without the prior written consent of the other party, however,
upon written notice to the other party, either party may assign this
Agreement to a successor in title to substantially all of its business
or assets. Subject to the foregoing, all of the terms and provisions of
this Agreement shall be binding upon and insure to the benefit of and be
enforceable by the successors and permitted assigns of Xxxx Atlantic and
NMS.
10.10 Survival. The respective obligations of each party that would by their
nature continue after the termination or expiration of this Agreement,
including without limitation those contained in Confidentiality,
Indemnification and Intellectual Property Indemnification sections and
shall survive the termination or expiration of this Agreement.
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10.11 Counterparts. This Agreement may be executed in one or more
counterparts each of which shall be deemed to be an original and all of
which, taken together, shall constitute a single instrument.
10.12 Benefit of the Parties. This Agreement is for the sole and exclusive
benefit of the parties hereto and is not intended to, nor does it,
confer any benefit upon any third party.
10.13 Jurisdiction and Venue. This Agreement may be enforced in any federal
court or New York state court sitting in the County of New York in the
State of New York, and each party hereto consents to the jurisdiction
and venue of any such court and waives any argument that venue in such
forums in not convenient. If any party hereto commences any action
arising from this Agreement in another jurisdiction or venue, any other
party to this Agreement shall have the option of transferring the case
to the above-described venue or jurisdiction or if such transfer cannot
be accomplished, to have such case dismissed without prejudice.
IN WITNESS WHEREOF, the parties hereto, through their duly authorized
representatives, have executed this Agreement effective as of the day and year
first set forth above.
NETWORK MANAGEMENT SERVICES, INC.
BY: /s/ Xxxxx X. Xxxxxxxx
------------------------------
Name: Xxxxx X. Xxxxxxxx
------------------------
Title: Chief Financial Officer
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XXXX ATLANTIC CORPORATION
By: /s/ Xxxxxxx X. Xxxxxx
------------------------------
Name: Xxxxxxx X. Xxxxxx
------------------------
Title: SPL
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[LOGO OF NETWORK MANAGEMENT SERVICES]
APPENDIX A
Description of Services
Xxxx Atlantic
ADMINISTRATION
CONVERSION SERVICES AND FEES
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Conversion 1998 1999 2000 Comments
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Data Import - Set-up *** Assumes 1 BEN-IN (import) from
Description: Analysis of group reporting, rate and benefit ***
structure required by client. Data mapping imports from
Kwasha's system, database enhancements for customized
data capture. Pre-import edit logic and reports
development.
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Data Export- Set-Up
Level I Level I Interfaces are *** per
Description: Interface with program vendors to deliver *** *** *** interface
consolidated electronic data feed where employee Assumed electronic interfaces
population is 1000+. Assumes comprehensive data (minimum)
elements, single line of coverage (medical), translating ***
into or converting from existing group structures.
Fee to set-up remaining,
Level II non-electronic interfaces in 1998.
Description: Interface with program vendors (with less Going forward, new Level II
than 1000 employees) to deliver hard copy "Smart" paper *** XXX XXX interfaces *** per interface
data feeds.
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MDElect Set-up NA for Not applicable for 1999 Plan Year,
1999 scope TBD for Plan Year 2000.
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PlanSelect Set-up *** This tool will mirror the
Description: Initialization of benefit communication tool information contained within the HMO
to be used by NMS Customer Service Call Center Fact Sheets provided to Xxxx
representatives Atlantic employees/retirees during
open enrollment.
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Fulfillment IVR Set-up *** This tool will offset the call
Description: Analysis, design and development of volumes to the Customer Service reps
Interactive Voice Response (IVR) system to handle Xxxx for routine fulfillment requests.
Atlantic retirees and actives requesting HMO Provider
Directories. System will off-load call volume from
Customer Service Call Center. Features include opt-out
to Customer Service. Will develop data file to send to
3rd party fulfillment provider.
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COBRA Administrative Services (CAS) Set-up ***
Description: Interface with CAS, Xxxx Atlantic's COBRA,
HIPAA and FSA Vendor.
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AIS Set-up (Kwasha's "Account Information System") *** Set-up includes the connections via
Description: Interface with Kwasha's system to enable NMS T1 line and necessary programming
customer service representatives to check enrollment and technical support to implement
options. set-up of AIS within NMS.
---------------------------------------------------------------------------------------------------------------------------------
Project Management *** ***
Description: Project Planning, Management, and
coordination with client and vendors to initialize
consolidated administration services, data Gathering,
Process Mapping, Implementation meetings, program
management, training.
---------------------------------------------------------------------------------------------------------------------------------
Total Implementation/Start-Up *** *** ***
---------------------------------------------------------------------------------------------------------------------------------
NMS Start-up Investment *** ***
---------------------------------------------------------------------------------------------------------------------------------
Xxxx Atlantic Start-up Investment ***
---------------------------------------------------------------------------------------------------------------------------------
1
*** Pursuant to Rule 406 of the Securities Act of 1933, as amended, confidential
portions of Exhibit 10.5 have been deleted and files separately with the
Securities and Exchange Commission pursuant to a request for confidential
treatment.
[LOGO OF NETWORK MANAGEMENT SERVICES]
APPENDIX A
Description of Services
Xxxx Atlantic
ADMINISTRATION
ONGOING SERVICES AND FEES
----------------------------------------------------------------------------------------------------------------------------------
On-Going Fee Basis Billing Projected Comments
Administration Basis Annual Fees
----------------------------------------------------------------------------------------------------------------------------------
Data Import - On-Going N/A N/A N/A Assumes 1 weekly import file from ***.
Description: Receipt and Included in other fees
processing of enrollment Includes access and maintenance of
adds, changes, and connection. Special technical support
terminations via electronic will be billed at *** per hour as
import from Kwasha. needed.
Receipt and processing of *** per month Billed *** Assumes 1 import file from *** on a
COBRA, HIPAA and FSA adds, monthly weekly basis.
changes and terminations
via electronic import from
CAS.
----------------------------------------------------------------------------------------------------------------------------------
Customer Service Call Center Center Operation Fee Billed COF Center Operation Fee is charged on a
Description: Receive and (COF) monthly - Ongoing fixed monthly basis to operate the Call
respond to inquiries from - ***/month in *** Center including management,
active employees, retirees, ongoing plus advance - Open Enroll recruiting , coaching, development and
Xxxx Atlantic HR additional *** reporting.
representatives, and - ***/month
vendors. Respond to during Open
inquiries regarding Enrollment
enrollment, eligibility,
and plan benefits.
Staff Station Rate (SSR) Billed SSR Fees Staff Station Rate (SSR) is a charge per
- ***/hour monthly - Ongoing hour per representative or "workstation"
based on *** to Xxxx Atlantic. This rate includes
hours - Open Enroll salary, benefits, standard desktop
*** technology and space at standard
non-overtime hours. Estimate *** ongoing
hours plus *** during Open Enrollment.
Productivity improvements will be
reflected in fewer dedicated
representatives. The SSR will be adjusted
each year in July/August by ECI (see
notes at end of Description of Services)
System Access Rate (SAR) is a charge per
System Access Rate Billed SAR Fees hour per representative dedicated to
(SAR) monthly - Ongoing Xxxx Atlantic for access to unique
- AIS ***/hour based on *** system modules. Access to Microsoft
- Mcare ***/hour hours - Open Enroll Office or similar desktop tools is
*** included in SSR. Includes access to Core
BEN-NETTM Enrollment Module. Estimate ***
ongoing hours plus *** during Open
Enrollment
*** per year Fees to 1998 Costs for telephone, printing, postage
be billed *** will be passed back.
Includes: PlanSelect 1/12 per
Description: On-line month or 1999-2003 This tool will mirror the information
communication tool to be *** per *** contained within the HMO Fact Sheets
used by NMS customer month provided to Xxxx Atlantic
service representatives to employees/retirees during open
support Xxxx Atlantic enrollment.
employees and retirees
throughout open enrollment
and ongoing.
----------------------------------------------------------------------------------------------------------------------------------
2
*** Pursuant to Rule 406 of the Securities Act of 1933, as amended, confidential
portions of Exhibit 10.5 have been deleted and files separately with the
Securities and Exchange Commission pursuant to a request for confidential
treatment.
[LOGO OF NETWORK MANAGEMENT SERVICES]
APPENDIX A
Description of Services
Xxxx Atlantic
-------------------------------------------------------------------------------
On-Going Admin Fee Basis Billing Annual Comments
----------------------------------------------------------------------------------------------------------------------------------
Senior Source Center Center Operation Fee Billed COF ***
Description: Receive and *** per month Monthly - Enrollment
respond to inquiries from in ***
Medicare eligible retirees Advance
regarding enrollment,
eligibility, and plan Billed SSR Fees
benefits relating to Staff Station Rate (SSR) monthly - ***
Medicare HMO enrollment. ***/hour based on
Includes inbound and hours
outbound telemarketing System Access Rate SAR Fees
support. ***/hour for Meeting - ***
Management
----------------------------------------------------------------------------------------------------------------------------------
Fulfillment IVR *** per month when Monthly in Monthly Fee This tool will offset call volumes
Description: Ongoing Operational Advance *** to Customer Service reps for routine
support of Interactive fulfillment requests.
Voice Response (IVR) system plus
to handle Xxxx Atlantic Project that the application will be up
retirees and actives and running three months of the year
requesting HMO Provider ***/call Billed Call Charge
Directories. System will monthly ***
Customer Service. Features based on ***
include opt-out to customer hours
service and sending data
file to 3/rd/ party
fulfillment provider.
-----------------------------------------------------------------------------------------------------------------------------------
Delivery of Enrollment Data Active Fees Billed Active Commercial ***
to HMOs Commercial monthly in 1998
Description: Distribution *** pepm conjunction *** Vendor Audit assumes ***% of vendors
and confirmation of with participate (to be jointly determined)
enrollment adds, changes, "self-xxxx." 1999-2003 Above ***% participation will be
and terminations via *** priced upon request on a per vendor per
electronic export or paper quarter basis with initial set-up fees
on a weekly or as Medicare Risk Medicare Risk per vendor. ***% membership. The
appropriate basis. *** pepm 1998 Copy Return component relies on vendor
*** cooperation in meeting the file
Includes Vendor Audit: specifications and returning the file
Confirmation of data on a quarterly basis. Copy Return is
integrity using NMS Vendor 1999-2003 an electronic audit of ***% plan
Audit: program in two parts *** membership on a quarterly basis.
Enrollment Audit and Copy
Return Audit. Quarterly
performance summaries
provided.
------------------------------------------------------------------------------------------------------------------------------------
Medicare HMO Enrollment *** per HCFA form sent Billed 1998 *** during open enrollment
Support monthly ***
Description: NMS will based on
receive Medicare HMO forms
enrollment designations
from Kwasha on a regular
basis which will trigger
the distribution of HMO
specific HCFA enrollment
forms to enrollees. NMS
will generate an enrollee
letter, maintain stock and
coordinate mailings.
====================================================================================================================================
On-Going Admin Fee Basis Billing Annual Comments
------------------------------------------------------------------------------------------------------------------------------------
3
***Pursuant to Rule 406 of the Securities Act of 1933, as amended, confidential
portions of Exhibit 10.5 have been deleted and filed separately with the
Securities and Exchange Commission pursuant to a request for confidential
treatment.
[LOGO OF NETWORK MANAGEMENT SERVICES]
APPENDIX A
Description of Services
Xxxx Atlantic
--------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Consolidated Premium Active Fees Active Assumes 79,500 Active Commercial
Remittance, Reconciliation, Commercial billed Commercial employees
and Distribution *** pepm monthly 1998
Description: Calculation and in *** Assumes 8,700 Medicare Risk retirees
distribution of conjunction
consolidated monthly with
"self-xxxx" to client using "self-xxxx." 1999-2003 Ongoing service to start in
NMS standard invoice *** December 1998.
format, with fully
adjudicated retroactive Assumes Xxxx Atlantic sets up and
adjustment processing and owns a bank account and gives NMS debit
reconciliation. Medicare Risk Medicare Risk authority and assumes NMS is not
Distribution of payments *** pepm 1998 responsible for bank account
with fully reconciled *** reconciliation or monthly service fees.
supporting backup via ACH
to vendors 1999-2003 NMS is responsible for initiating the
*** funding transaction on a monthly
basis.
----------------------------------------------------------------------------------------------------------------------------------
Claims Transfer of Funds Active and Medicare Risk Fees billed TBD based on Pricing based on assumption of
Request (CTFR) *** pepm monthly in volume and following breakdowns:
Definition: On a weekly for those enrolled in ASO conjunction number of Xxxx Atlantic North and South
basis, NMS coordinates all plan with self-funded 4 level group structure
claims funding requests and "self-xxxx." plans
provides a single Note that pepm applies only to those
consolidated invoice to employees/retirees in a Self-funded
Xxxx Atlantic. This (ASO) plan.
invoice identifies the
total funds that need to be
distributed to each
self-funded vendor.
------------------------------------------------------------------------------------------------------------------------------------
Consolidated Reporting Active Fees billed Active Assumes 79,500 Active Commercial
Standard Commercial monthly in Commercial employees
"Standard" reporting package *** pepm conjunction 1998 ***
includes monthly enrollment with Assumes 8,700 Medicare Risk retirees
detail and summary, monthly "self-xxxx." 1999-2003
cash flow report, *** Ongoing service to start in
consolidated self-xxxx, September 1998.
consolidated transfer of
funds request, and call Medicare Risk Medicare Risk
tracking reports. *** pepm 1998 ***
1999-2003
***
Ad Hoc
Description: Analysis and ***/hour Fees to be Ad Hoc Assumes 20 reports at 1.5 hours per
programming of custom billed 1/12 1998 *** report.
reports to support data per month or Requests beyond 30 hours annually to
management and decision *** per 1999-2003 be billed at ***/hour
making outside of the month ***
standard reporting package
(e.g. Y-T-D Enrollment,
Monthly Enrollment and
Payment summary).
-----------------------------------------------------------------------------------------------------------------------------------
Routine Correspondence *** per year Fees to be 1998 Ongoing service to start in
Description: To include: billed 1/12 *** January 1, 1999.
direct member per month or
correspondence, electronic *** 1999-2003
mail, faxes and Xxxx ***
Atlantic Medicare HMO
Enrollment Forms (HCFA).
----------------------------------------------------------------------------------------------------------------------------------
4
***Pursuant to Rule 406 of the Securities Act of 1933, as amended, confidential
portions of Exhibit 10.5 have been deleted and filed separately with the
Securities and Exchange Commission pursuant to a request for confidential
treatment.
--------------------------------------------------------------------------------
[LOGO OF NETWORK MANAGEMENT SERVICES]
APPENDIX A
Description of Services
Xxxx Atlantic
--------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------------
On-Going Admin Fee Basis Billing Annual Comments
----------------------------------------------------------------------------------------------------------------------------------
Produce Schedule As for Form *** per year Fees to be 1998 The following information will be
5500 billed 1/12 *** provided to Xxxx Atlantic within 60
Description: NMS shall per month or days after the completion of the
provide Xxxx Atlantic *** 1999-2003 contract year.
summary level data to ***
assist them in their . Vendor name
production of their Form . Vendor contract identifier
5500 Schedule A. . Contract year dates
. Type of benefit (i.e. medical)
. Enrollment at the end of the
contract for contract year
. Gross premiums paid for contract
year
. Total agent/broker commissions
paid act (including fees paid, if
any) for contract year, if
applicable
-----------------------------------------------------------------------------------------------------------------------------------
Service Team Included in fees N/A N/A
Description: Client Team
Management, including
measuring and reporting of
performance standards, call
statistics, solving vendor
process issues,
recommending strategic
enhancements to system or
service, communication with
client and vendors.
-----------------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------------
***Pursuant to Rule 406 of the Securities Act of 1933, as amended, confidential
portions of Exhibit 10.5 have been deleted and filed separately with the
Securities and Exchange Commission pursuant to a request for confidential
treatment.
5
--------------------------------------------------------------------------------
[LOGO OF NETWORK MANAGEMENT SERVICES]
APPENDIX A
Description of Services
Xxxx Atlantic
--------------------------------------------------------------------------------
VALUE ADDED SERVICES
---------------------------------------------------------------------------------------------------------------------------------
Value added Service Fee Basis Billing Projected Comments
Basis Annual Fees
---------------------------------------------------------------------------------------------------------------------------------
Fulfillment General Management fees for 1998
Description: NMS to "General 10% of pass *** to be NMS *** assumed at *** given forecasted 3rd
Manage" third party fulfillment through 3rd billed during party fees.
services for HMO Provider party printing/ Open 3/rd/ party fees
Directories for the Medicare HMO fulfillment Enrollment estimated at *** General management fee does not
and Commercial HMO population. costs Process annually include additional systems and
Provider Directories to be + + operational resources required for
offered on-demand only except for Pass through of Pass through execution.
the "age-in" populations for CWA 3/rd/ party costs as incurred
over age 65 retirees. NMS will NMS to subcontract fulfillment with
provide fulfillment general 3rd party vendor
management on an as requested
basis. NMS will pass through 3rd party
costs to Xxxx Atlantic
---------------------------------------------------------------------------------------------------------------------------------
ScoreCard ***
Description *** /plan/ Fees billed TBD
. Quarterly and Annual data month per month
collection and validation of
self-reported data elements from
vendors and markets where
appropriate for selected measures.
. Provider Access phone calls and
evaluations for targeted provider
clinics within the appropriate
health plans.
. Member services evaluation of
vendor's customer service
department(s)
. Member Satisfaction survey
administration on a semi-annual
basis.
. Evaluation and scoring of plan
performance on a quarterly basis.
. Reporting of results back to
Xxxx Atlantic and it's vendors on
a Quarterly basis.
. Facilitation of quarterly
conference calls with Xxxx
Atlantic and individual vendors
to discuss results, engage plans
in action plan development and
process improvement initiatives.
----------------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------------
***Pursuant to Rule 406 of the Securities Act of 1933, as amended, confidential
portions of Exhibit 10.5 have been deleted and filed separately with the
Securities and Exchange Commission pursuant to a request for confidential
treatment.
6
[LOGO OF NETWORK MANAGEMENT SERVICES]
APPENDIX A
Description of Services
Xxxx Atlantic
STRATEGY AND RATE SOLICITATION
COMMERCIAL HMOs
------------------------------------------------------------------------------------------------------------------------------------
Strategy and Rate Solicitation Fee Basis Billing Basis Projected Comments
Annual Fees
------------------------------------------------------------------------------------------------------------------------------------
Strategic planning and analysis of Per hour fees 1999 Assumed hours by year in original proposal
HMO offerings *** per hour to be billed *** . ***
Description: Collaborate with Xxxx monthly based Activities in 1998 are underway
Atlantic staff to develop Xxxx on previous 2000
Atlantic's 2002 strategic vision month's hours *** Fees for 2002 and 2003 to be increased by
including: CPI adjustment over previous year (e.g.
. 2002 vision statement that 2001 2002 vs. 2001, 2003 vs. 2002)
addresses landscape, marketplace ***
pricing, migration strategies and
corporate sign-off
. Market by market definition and
HMO consolidation strategy
. Finalize standard plan design
. Finalize vendor performance
standards for scorecard
. Evaluate MCBG participation in
select markets (price quotes and
participation fees are extra)
------------------------------------------------------------------------------------------------------------------------------------
Communication Strategy and *** per hour Initially part of Xxxxxx duties.
Execution for technical Billed monthly Transferred to NMS.
Description: Work with Xxxx writing as incurred
Atlantic staff and external
consultants to develop and *** per hour
execute employee and retiree for systems and
communication documents including operational
Open Enrollment materials and support
other projects as requested
------------------------------------------------------------------------------------------------------------------------------------
7
***Pursuant to Rule 406 of the Securities Act of 1933, as amended, confidential
portions of Exhibit 10.5 have been deleted and filed separately with the
Securities and Exchange Commission pursuant to a request for confidential
treatment.
[LOGO OF NETWORK MANAGEMENT SERVICES]
APPENDIX A
Description of Services
Xxxx Atlantic
------------------------------------------------------------------------------------------------------------------------------------
HMO rate solicitation and *** annually Fees to be 1999-2001 Monthly charges to start January 1999
negotiation billed 1/12 ***
Description: Customize and per month or Fees for 2002 and 2003 to be increased
implement selection and renewal *** per month by CPI adjustment over previous year
RFP packets. Services include (e.g. 2002 vs. 2001, 2003 vs. 2002)
. Coordinate renewals and
selections across multiple Key terms agreement refers to rates,
markets and vendors performance guarantees and services
. Conduct zip code, PCP and included in ASO arrangements.
facilities network matches
. Collect and analyze actuary and
underwriting data/assumptions for
rate negotiations
. Evaluate funding
appropriateness for claims targets
. Analyze and score HMO bids,
market by market
. Negotiate premiums and/or ASO
fees and claims targets
. Negotiate performance guarantees
. Conduct conference calls with
Xxxx Atlantic
. Finalize financial terms
. Secure key terms agreements
. Prepare final analysis binder
------------------------------------------------------------------------------------------------------------------------------------
Strategy and Rates Fee Basis Billing Annual Fees Comments
Commercial HMOs
------------------------------------------------------------------------------------------------------------------------------------
Financial analysis of Per market fees 1999-2001 ***
alternatively funded HMO *** per to be billed as ***
arrangements market percentage Fees for 2002 and 2003 to be increased
Description: NMS will conduct a completion per by CPI adjustment over previous year (e.g.
self-funding feasibility analysis market vs. 2002 2001, 2003 vs.2002)
to evaluate the relevant factors
and estimate a reasonable cost on
such factors. NMS will appraise
key factors like plan design,
stop-loss, group longevity and
predictability, employer's
financial condition, reserves,
plan administration, employee
communication, etc.
------------------------------------------------------------------------------------------------------------------------------------
Confirm benefit plan design for *** Fees to be 1999-2001 Bid for service was *** allocated 50% to
enrollment annually billed 1/12 *** Commercial HMOs and 50% to Medicare Risk
Description: NMS will collect and per month or HMOs
finalize all HMO benefit plan *** per month Monthly charges to start January 1999
design changes due to state
and/or federal mandates and/or Fees for 2002 and 2003 to be increased by
requested by Xxxx Atlantic. CPI adjustment over previous year (e.g.
2002 vs. 2001, 2003 vs. 2002)
-----------------------------------------------------------------------------------------------------------------------------------
8
***Pursuant to Rule 406 of the Securities Act of 1933, as amended, confidential
portions of Exhibit 10.5 have been deleted and filed separately with the
Securities and Exchange Commission pursuant to a request for confidential
treatment.
[LOGO OF NETWORK MANAGEMENT SERVICES]
APPENDIX A
Description of Services
Xxxx Atlantic
------------------------------------------------------------------------------------------------------------------------------------
Provide data for HMO report cards *** Fees to be 1999-2001 Bid for service was *** allocated 50% to
Description: NMS to gather HMO annually billed 1/12 *** Commercial HMOs and 50% to Medicare Risk HMOs
benefit plan detail annually, to per month or
assist in the completion of the *** per Monthly charges to start January 1999
HMO Report Card ("What You Told month
Us About Your HMO"). Fees for 2002 and 2003 to be increased by CPI
adjustment over previous year (e.g. 2002 vs.
2001, 2003 vs. 2002)
------------------------------------------------------------------------------------------------------------------------------------
Analysis, confirmation and *** Fees to be 1999-2003 Bid for service was *** allocated 50% to
clean-up of zip code data/service annually billed 1/12 *** Commercial HMOs and 50% to Medicare Risk HMOs
areas per month or
Description: NMS will collect and *** per Monthly charges to start January 1999
confirm health plan service area month
zip code ranges, annually. NMS
will confirm and document all
changes, with explanations. NMS
will feed updated zip code files
to Xxxx Atlantic and/or Kwasha.
------------------------------------------------------------------------------------------------------------------------------------
Coordination of Commercial *** per FTE Fees to be TBD 1998 Resources estimates for Commercial and
Enrollment Seminars for billed per Medicare HMOs
Description: NMS will manage and Management/ month at . ***
coordinate Commercial HMO Coordination *** per FTE
meetings including: per month Resources beyond 1998 to be determined during
. Meeting set-up Additional planning process
. Health Plan and Ambassador resources at
Training and Coordination for *** per hour
meeting attendance Number of Onsite meetings TBD
. "On the ground" meeting presence Onsite mtg
management
. Billing activities related to ***/day/ Fees to be increased each year by CPI
meeting management person (plus adjustment
. Collect refunds from HMOs T&E)
. Reporting and documentation
------------------------------------------------------------------------------------------------------------------------------------
Strategy and Rates Fee Basis Billing Annual Fees Comments
Commercial HMOs
------------------------------------------------------------------------------------------------------------------------------------
Manage contracts between HMO and Per hour fees 1999-2001 1998 activity: NMS is proposing Xxxxxx, on
Xxxx Atlantic *** per hour to be billed *** behalf of Xxxx Atlantic put in place contracts
Description: NMS will incorporate monthly based 1999 activity: NMS will assume
HMO contracting into the renewal on previous responsibility for contract development and
and selection process. NMS will month's hours negotiation
negotiate and prepare a legal
document that defines the terms ***
and conditions of Xxxx Atlantic's
relationship with its HMO Fees for 2002 and 2003 to be increased by CPI
vendors. NMS will facilitate adjustment over previous year (e.g. 2002 vs.
securing principle signatures 2001, 2003 vs. 2002)
from Xxxx Atlantic and its vendor
representatives.
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
9
*** Pursuant to Rule 406 of the Securities Act of 1933, as amended, confidential
portions of Exhibit 10.5 have been deleted and filed seperately with the
Securities Exchange Commission pursuant to a request for confidential treatment.
[LOGO OF NETWORK MANAGEMENT SERVICES]
APPENDIX A
Description of Services
Xxxx Atlantic
STRATEGY AND RATE SOLICITATION
MEDICARE HMOs
------------------------------------------------------------------------------------------------------------------------------------
Strategy and Rate Solicitation Fee Basis Billing Projected Comments
Basis Annual Fees
------------------------------------------------------------------------------------------------------------------------------------
Strategic planning and analysis of Per hour fees 1999 Assumed hours by year
HMO offerings ***per hour to be billed *** . ***
Description: Collaborate with Xxxx monthly based
Atlantic staff to develop Xxxx on previous 2000 Fees for 2002 and 2003 to be increased
Atlantic's 2002 strategic vision month's hours *** by CPI adjustment over previous year
including: (e.g. 2002 vs.2001, 2003 vs. 2002)
. 2002 vision statement that 2001
addresses landscape, marketplace ***
pricing, migration strategies and
corporate sign-off
. Market by market definition and
HMO consolidation strategy
. Finalize standard plan design
. Finalize vendor performance
standards for scorecard
. Evaluate MCBG participation in
select markets (price quotes and
participation fees are extra)
------------------------------------------------------------------------------------------------------------------------------------
Communication Strategy and *** per hour for Initially part of Xxxxxx duties.
Execution technical Billed monthly Transferred to NMS.
Description: Work with Xxxx writing as incurred
Atlantic staff and external *** per hour for
consultants to develop and systems and
execute employee and retiree operational
communication documents including support
Open Enrollment materials and
other projects as requested
------------------------------------------------------------------------------------------------------------------------------------
HMO rate solicitation and *** annually Fees to be 1999-2001 Monthly charges to start January 1999
negotiation billed 1/12 ***
Description: Customize and per month or Fees for 2002 and 2003 to be increased
implement selection and renewal *** per by CPI adjustment over previous year
RFP packets. Services include month (e.g. 2002 vs. 2001, 2003 vs. 2002)
. Coordinate renewals and
selections across multiple Key terms agreement refers to rates,
markets and vendors performance guarantees and services
. Conduct zip code, PCP and included in ASO arrangements.
facilities network matches
. Collect and analyze actuary and
underwriting data/assumptions for
rate negotiations
. Evaluate funding
appropriateness for claims targets
. Analyze and score HMO bids,
market by market
. Negotiate premiums and/or ASO
fees and claims targets
. Negotiate performance guarantees
. Conduct conference calls with
Xxxx Atlantic
. Finalize financial terms
. Secure key terms agreements
. Prepare final analysis binder
------------------------------------------------------------------------------------------------------------------------------------
10
*** Pursuant to Rule 406 of the Securities Act of 1933, as amended, confidential
portions of Exhibit 10.5 have been deleted and filed seperately with the
Securities Exchange Commission pursuant to a request for confidential treatment.
[LOGO OF NETWORK MANAGEMENT SERVICES]
APPENDIX A
Description of Services
Xxxx Atlantic
Notes:
. NMS has included up to *** per calendar year without charge back to Xxxx
Atlantic. Additional travel expenses will be passed back to Xxxx Atlantic for
reimbursement.
. Set-Up fees may be billed throughout the contract period, with initial
invoicing commencing with implementation kick-off.
. On-Going fees are invoiced and collected on a monthly basis as a component of
the HMO premium distribution process.
. NMS reserves the right to charge client for expenses incurred relating to
overnight or express delivery if the method of delivery requested varies from
NMS standard distribution protocol.
. NMS reserves the right to charge client's vendors for expenses incurred
relating to failure to return 9 track tapes should this media be the vendor's
preferred transmission method.
. Ad Hoc consulting projects will be charged at an hourly rate of *** (i.e.
vendor performance guarantee review and analysis for 1999 open enrollment.
. NMS supports a five-year contract with Xxxx Atlantic for Administrative
Services commencing on 7/1/98. Certain rates escalated by CPI are identified
in the comments. Pricing for Administration is "protected" for 1999, 2000,
and 2001.
. Pepm is defined as "per employee per month" or per subscriber (either retiree
or employee) per month.
. The Staff Station Rate (SSR) will be adjusted each year in July/August when
the 2/nd/ quarter changes to the U.S. Bureau of Labor Statistics Employment
Cost Index (ECI) for all Workers in Private Industry Region IV - Chicago
(which includes Minneapolis) is published. As a reference point, the 1998
2/nd/ quarter versus 1997 2/nd/ quarter change was 4.0% [(134.9-
129.7)/129.7].
12
*** Pursuant to Rule 406 of the Securities Act of 1933, as amended, confidential
portions of Exhibit 10.5 have been deleted and filed seperately with the
Securities Exchange Commission pursuant to a request for confidential treatment.
