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EXHIBIT 10.10
MANAGEMENT SERVICES AGREEMENT
THIS MANAGEMENT SERVICES AGREEMENT ("Management Services Agreement") by
and between Physician Healthcare Plan of New Jersey. Inc. ("PHPNJ") and
Medigroup of New Jersey, Inc. ("Medigroup"), is entered into as of June 26,
1997, for the period as hereinafter set forth.
WITNESSETH
WHEREAS, by an Agreement ("Agreement") dated June 26. 1997, the parties
have agreed to the purchase by Medigroup of certain assets of PHPNJ's HMO and
PPO business ("PHPNJ's Business"): and
WHEREAS, under this Agreement, Medigroup has agreed to provide
management services ("Management Services") for PHPNJ's Business for the period
and under the terms and conditions as hereinafter set forth:
NOW, THEREFORE, the parties hereto agree as follows:
1. Management Services to be Provided.
The Management Services to be provided by Medigroup shall be those
management and administrative services necessary for the operation of PHPNJ's
Business. These Management Services, which Medigroup may provide directly or
through subcontract, shall include services relating to claims processing,
member services, enrollment, provider assistance, utilization management and
financial services, including accounting and reporting for all product lines of
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PHPNJ's Business: provided, however, that such services shall not include any
reporting to the Securities and Exchange Commission or any related Federal and
state reporting required under the securities laws of the United States or the
State of New Jersey. The Management Services are more fully set forth in Section
2 below and in Schedule A (which includes performance standards), which is
attached hereto and made a part hereof
2. Certain Management Services
Management Services shall include the following:
(a) Accounting/Books and Records. Medigroup shall
maintain PHPNJ's accounting system and maintain all
books and records with respect to PHPNJ's Business
dunng the term of the Management Services Agreement:
(b) Collections. Medigroup shall use its best efforts to
collect all premiums and other revenue due PHPNJ and
shall deposit same in the Operating Account (as
defined below).
(c) Licenses. Medigroup shall maintain all licenses,
certifications and permits required by applicable
law and regulation in connection with the
manangement and operation of PHPNJ's business:
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(d) Operating Account. Medigroup shall establish in the
name of PHPNJ at a bank of Medigroup's choice, an
operating account (the "Operating Account") into
which Medigroup shall deposit all amounts received
from the operation of PHPNJ's Business. Medigroup
shall not commingle with its own funds any monies
received from the operation of PHPNJ's Business.
PHPNJ agrees that Medigroup shall have access to and
the right to make withdrawals from the Operating
Account, and for that purpose. PHPNJ agrees to
execute such power of attorney, signature card or
other instrument as may be required by the
applicable bank. PHPNJ herby irrevocably authorizes
Medigroup to make such endorsements on any checks,
drafts, or other instuments to be deposited into the
Operating Account as is necessary to permit their
collection. PHPNJ hereby expressly authorizes
Medigroup to pay when due from the Operating
Account all amounts with respect to PHPNJ's
Business: and
(e) Financial Statements. Medigroup shall deliver to
PHPNJ on a monthly basis a balance sheet, a profit
and loss statement and a disbursement schedule.
(f) Coordination With PHPNJ's Designee. During the term
of the Management Services Agreement. Medigroup shall
use its best efforts to coordinate its activities
with a designee appointed by PHPNJ.
3. Transition to Management Services Agreement.
It is understood that PHPNJ's existing management agreement with
Medical Group Management. Inc. ("MGM") will be terminated as soon as it is
mutually determined an orderly transition would permit. PHPNJ shall work with
Medigroup to ensure a smooth transition, and PHPNJ shall use its best efforts to
obtain the full cooperation of MGM and MGM's subcontractors in regard to any
required assistance needed by Medigroup in regard to the transition.
4. Term of Management Services Agreement.
The term of the Management Services Agreement shall commence as of July
1, 1997 ("Commencement Date"). Unless terminated sooner pursuant to this
Management Services Agreement, the term of this Management Services Agreement
shall end on the first to occur of (a) the Closing Date (as defined in the
Agreement): or (b) sixty (60) days (the "Transition Period") after (i) the date
that the shareholders of PHPNJ vote to disapprove the Agreement, or
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(ii) the six (6) month anniversary of the Commencement Date if the shareholders
of PHPNJ have failed to vote on the Agreement during such six (6) month period.
During the Transition Period, and if necessary, for a reasonable period
thereafter. Medigroup shall work with PHPNJ to ensure a smooth and timely
transition to a successor manager. Medigroup hereby acknowledges PHPNJ's
objective of retaining as many HMO members and PPO lives as possible during the
term of the Management Services Agreement.
5. Management Fee
For the Management Services provided hereunder, PHPNJ shall pay to
Medigroup a management fee of $15 per member per month for each HMO member
enrolled in PHPNJ as of the first day of each month. Medigroup shall provide a
monthly invoice to PHPNJ, including a certification of membership, by the fifth
day of the month, and PHPNJ shall provide payment to Medigroup within ten (10)
days of receipt of such invoice. The $15 per member per month rate shall apply
through the Closing Date of the Agreement: provided, however, that if PHPNJ's
shareholders disapprove the Agreement within six (6) months of the Commencement
Date of the Management Services Agreement, the management fee shall be increased
to $25 per member per month, effective as of the date PHPNJ's shareholders
disapprove the Agreement, or sixty-one (61) days from the Commencement Date of
the Management Services Agreement, whichever shall occur earlier. In the event
the management fee of $25 per member per month is to be paid retroactively, the
retroactive payment shall be made within ten (10) days of PHPNJ's shareholders
vote to disapprove, or in the event the shareholders have not yet voted on the
Agreement, within ten (10) day's after the six (6) month anniversary of the
Commencement Date of the Management Services Agreement.
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6. Compliance with Law.
Both parties shall comply with all applicable law's and governmental
rules and regulations
7. Governing Law
The execution, validity, interpretation and enforcement of this
Management Services Agreement shall be governed by the laws of the State of New
Jersey.
8. Indemnification
Each party agrees to indemnify and hold harmless the other party, its
affiliates, successors, assigns, directors, officers, employees, independent
contractors and agents, from and against any and all liabilities, damages,
actions, suits, proceedings, claims, demands, losses, costs and expenses
(including reasonable attorneys' fees) that shall or may arise, directly or
indirectly, out of or in connection with any breach or inaccuracy of any
representation, warranty or covenant hereunder, misfeasance, malfeasance,
negligent or intentional act or omission of the indemnifying party, its
affiliates, successors, assigns, officers, directors, employees, independent
contractors or agents in connection with this Management Services Agreement.
9. Access.
During the term of the Management Services Agreement, each party shall
have reasonable access to the other partys facilities, personnel, contractors,
consultants, books, records. documents and other information in connection with
this Management Services Agreement.
10. Termination For Default.
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In the event Medigroup fails materially to perform or observe any of
its obligations under this Management Services Agreement, including, without
limitation, the performance standards in Schedule A. PHPNJ may declare Medigroup
in default upon written notice setting forth the nature of the default.
Medigroup's failure to cure the default within thirty (30) days of receipt of
notice thereof shall constitute a default, entitling PHPNJ to terminate this
Management Services Agreement and to all rights and remedies available at law'
or in equity'. In the event PHPNJ fails to pay or authorize payment of the
Management Fee when due hereunder or, in Medigroup's reasonable good faith
judgment, PHPNJ puts significant barriers in the way of Medigroup assuming or
performing any of its obligations under this Management Services Agreement.
Medigroup may declare PHPNJ in default upon written notice setting forth the
nature of the default. PHPNJ's failure to cure the default within thirty (30)
days of receipt of notice shall constitute a default, entitling Medigroup to
terminate this Management Services Agreement and to all rights and remedies
available at law or in equity.
11. General Provisions
11.1 Assignment This Management Services Agreement shall
be binding upon and inure to the benefit of the
parties hereto and their respective successors and
assigns. Neither party shall assign this Management
Services Agreement without the other's prior written
consent, which consent shall not be unreasonably
withheld:
provided, however, that Medigroup may, without such
prior consent of
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the other party, assign this Management Services
Agreement to its parent, a subsidiary or an
affiliate, provided such entity' has experience in
the operation and management of HMOs.
11.2 Independent Contractors. Nothing in this Agreement
shall affect the separate identity of PHPNJ and
Medigroup and their relationship to each other as
independent contractors. Other than as provided in
this Agreement or other written agreements, nothing
contained in this Agreement is intended to cause
either party, to be the agent of the other or as
limiting in any manner the parties in the conduct of
their respective businesses, ventures or activities.
11.3 Entire Agreement. This Management Services Agreement
and the Agreement contain all the terms and
conditions agreed upon by the parties hereto with
respect to the matters contained herein, and
constitute the entire understanding of the parties.
They supersede all other agreements, oral or
otherwise, regarding the subject matter hereof.
11.4 Notices. Any notice required to be given pursuant to
the terms and provisions of this Agreement shall be
in writing and shall be sent by certified mail,
return receipt requested, postage prepaid:
If to PHPNJ:
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Physician Healthcare Plan of New Jersey. Inc.
Princeton Pike Corporate Center
0000 Xxxxx Xxxxx
Xxxxxxxxxxxxx, Xxx Xxxxxx 00000
Attn: Xxxxxx Xxxxxxxx
with copies to:
Physician Healthcare Plan of New Jersey, Inc.
Princeton Pike Corporate Center
0000 Xxxxx Xxxxx
Xxxxxxxxxxxxx, Xxx Xxxxxx 00000
Attn: PHPNJ's Designee under Section 2(f) of this
Management Services Agreement
and
Ober, Kaler, Xxxxxx & Xxxxxxx
A Professional Corporation
000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxx. Xxxxxxxx 00000-0000
Attn: Xxxxx X. XxXxxxxx. Esq.
If to Medigroup:
Medigroup of New Jersey. Inc.
0 Xxxx Xxxxx Xxxx
Xxxxxx. Xxx Xxxxxx 00000-0000
Attn: Xxxxxxx X. Xxxx
11.5 Headings. The headings contained herein are for
convenience of reference only and are not intended to
define, limit or describe the scope or intent of any
provision of this Management Services Agreement.
11.6 Waiver. The waiver (which must be in writing) by
either party of any of the terms or provisions of
this Management Services Agreement shall not be
deemed to constitute a waiver of any of its other
terms or provisions. No waiver of the
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provisions of this Management Services Agreement
shall be deemed to constitute a continuing waiver
thereof unless otherwise expressly provided herein.
11.7 Amendment. This Management Services Agreement may be
amended, modified or superseded only by an instrument
signed by each of the parties hereto.
11.8 Execution in Counterparts. This Management Services
Agreement may be executed in counterparts, all of
which together shall constitute one and the same
instrument.
IN WITNESS WHEREOF, the parties have executed this Management Services
Agreement as of the day and year first above written.
PHYSICIAN HEALTHCARE PLAN MEDIGROUP OF NEW JERSEY, INC.
OF NEW JERSEY, INC.
By: /s/ Xxxxxx X. Xxxxxxxx By: /s/ Xxxxx X. Xxxxxxxxx
---------------------- ----------------------
Name: Xxxxxx X. Xxxxxxxx, M.D. Name: Xxxxx X. Xxxxxxxxx
Title: Chairman of the Board Title: Executive Vice President
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SCHEDULE A
MANAGEMENT SERVICES
General and Medical Management
- Maintain risk management programs and related insurance coverages
- Manage existing provider and subscriber contracts and their renewals,
and respond to requests for new business
- Member Management - Maintain Member records and verify eligibility;
provide fulfillment material and X.X.xxxxx
- Medical Claims Processing - Includes adjudication. letters and
explanations of benefits to Member, physicians and other healthcare
entities; payments and disbursements to primary care physicians,
specialist physicians, laboratory' and x-ray, hospitals and others. COB
and HPR Code review, charge backs and other sanctions. Negotiation of
claims.
- Maintain reinsurance arrangements
- Credentialing - Includes the management of the credentialing process
- Continue Quality Assurance activities
- Manage Out-of-Area Coverage
- Provider Network Maintenance - Updating addresses and tax I.D. numbers
and processing periodic fee schedule and medical policy changes
- Reconciliation of Provider Network Monthly Membership Recap to Monthly
Premium Report
- Providing all necessary Claims Administration Reports
- Providing all necessary Member Reports, including eligibility
information to providers
- Provide all necessary Provider Network Data for Analysis
- Continue Provider Network Integration activities
- Provide administrator, data and support to all committees appointed by
the board
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- Inpatient and Outpatient Utilization Management Services - Inpatient
and outpatient utilization management services as defined by PHPNJ's
medical policy procedures. Utilization management services include
support of PHPNJ's utilization. quality assurance, medical advisory
committees or their peer review and physician selection committees, and
necessary reports.
- Services
- Respond to Claim Status Inquiries
- Receive and Acknowledge Inquiries
- Investigate Appeals/Claim and present to Committee for
decision
- Conduct Network training and education program as it relates
to claims payment. referral and benefit policies and other
policies and procedures
- Member Services
- Receive. process and respond to all grievances in accordance
with protocols established by the grievance committee
- Provide appropriate Member notification of claims denials and
appeal rights through system generated correspondence
- Investigate Member appeals consistent with Committee policies
and procedures and deliver to PHPNJ for decision
- Process direct member inquiries regarding claims and
claims-related issues
- Dial up access for inquiry into PHPNJ membership
- File requested reports with New Jersey Department of Health
and Senior Services
- Provide continuation of services for the Health Care Payor
Coalition Account
FINANCIAL
- Reconcile bank statements
- Monitor late payments, notify group accounts of same and
terminate, if necessary
- Handle accounts payable
- Verify and pay broker commissions
- Manage cash and investments in accordance with PHPNJ policies
- File monthly and quarterly financial reports with the State of
New Jersey
- File small employer reports with State of New Jersey
- Handle compliance requirements for State employee accounts
- Transfer funds from Operating Fund to Claims Fund to cover
claims payment o Reconcile PPO receipts with utilization data
- Audit monthly pharmacy reports and make recommendations for
action as
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necessary
PERFORMANCE
- Enter eligibility within 5 business days of receipt
- Enter group information within 5 business days of receipt
- Distribute premium xxxxxxxx by 20th of each month
- Distribute renewals to groups 60 days prior to anniversary
date
- Provide financial statements by the 15th of each month
- Pay broker commissions by the 10th of each month
- Notification of referrals/pre-certification request within
24-48 hours for routine: 4 hours for urgent/emergent
- Phone responses - less than 3% abandonment: answer within 45
seconds
- Enter provider file maintenance within 10 business days from
day of receipt
- Maintain credentialing as stated in program
- Submit regulatory filings as required
- Distribute ID cards within 15 business days (initial renewal
and PCP changes)
- Respond to initial appeal within 5 business days from date of
receipt
- Distribute new member packet within 15 business days from
effective date
- Distribute master group contracts within 15 business days from
effective date
- Post cash receipts before billing run each month
- Distribute notices of late payment on the 20th of each month
- Distribute termination notice for non-payment on the 1st of
each month
- Process accounts payable every two weeks
- Perform reinsurance accounting and reporting by the 5th of
each month
- Distribute eligibility listing to PCPs by the 1st of each
month
- Fund check runs within 24 hours of request
- Transfer eligibility to vendors on the 1st of each month
- Adjudicate claims within 15 business days from date of receipt
- Maintain a 98% accuracy rate for claims processing
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