AMENDMENT NO. 1
to the
MANAGED CARE SERVICE AGREEMENT
between
HEALTH RISK MANAGEMENT, INC.
and KEYSTONE MERCY HEALTH PLAN
THIS AMENDMENT NO. 1 is made and entered into effective as of the 1st day
of October, 1997, ("Effective Date"), by and between HEALTH RISK MANAGEMENT,
INC., having offices at 0000 Xxxx 00xx Xxxxxx, Xxxxxxxxxxx, Xxxxxxxxx ("HRM")
and KEYSTONE MERCY HEALTH PLAN, having offices at 000 Xxxxxxx Xxxxx,
Xxxxxxxxxxxx, Xxxxxxxxxxxx ("KMHP").
RECITALS:
WHEREAS, HRM and KMHP are parties to that certain Managed Care Service
Agreement dated October 29, 1996, whereby KMHP utilizes certain HRM systems,
software and resource management services, and HRM provides certain related
health care cost management services to KMHP with respect to KMHP's
participating members to whom managed health care services are delivered under
KMHP programs (the "Agreement"); and
WHEREAS, by executing this Amendment No. 1, HRM and KMHP desire to amend
certain provisions of the Agreement to address and clarify issues that have
arisen during the course of performance under the Agreement;
NOW, THEREFORE, in consideration of the foregoing and in consideration of
the mutual promises of the parties hereto and the mutual benefits to be gained
by the performance hereof, the parties hereto agree as follows:
1. Section 3.k., including subsections 3.k.i, ii and iii thereof, is deleted
in its entirety and is not to be replaced or restated.
2. Section 11.e. is hereby deleted in its entirety and the following is hereby
inserted in its place.
"e. If any of the following events occur: (i) the actual Per Covered
Member Per Month ("PMPM") calculation for Inpatient (LOB 100), pursuant to
Section 6 of the Amended Schedule 1 - Fee Schedule, "Performance Bonus," is
greater than ninety-two percent (92%) of the 1996 Baseline PMPM used for
the Target PMPM for calendar year 1998. (The Target PMPM is eighty-five
percent (85%) of the 1996 Baseline PMPM.); (ii) KMHP ceases to operate
under a DPW Contract or otherwise terminates doing business in the Service
Area; (iii) a sale of HRM or of all or substantially all of HRM's assets;
(iv) a merger or consolidation of HRM or a change of direct or indirect
control of HRM or a change of HRM's executive management; or (v) HRM, or an
affiliate of HRM or an entity in which HRM holds an equity or ownership
interest, is a competitor of KMHP, then KMHP may terminate the Managed Care
Service Agreement with at least sixty (60) days written notice to HRM;
provided, however, except for a termination under clause (iii), (iv) or (v)
above, KMHP shall pay the cost of termination, with no further obligation
of any kind to HRM, as follows:
i. Two (2) months of gross salary of HRM's dedicated Minneapolis staff
(i.e., full-time equivalents ["FTE's"] then working on KMHP services).
ii. Usage fees calculated at $0.11 per Covered Member per month for a
six (6) month period after the termination date.
For the purposes of this subsection 11.e., an entity shall be
considered a competitor of KMHP if such entity is engaged in, has agreed to
engage in, or has submitted a proposal or filing to a governmental agency
or other party to engage in the provision of managed care services to
Medical Assistance recipients in the Service Area.
For the purposes of this subsection 11.e., the term "affiliate" of any
entity shall mean a party that directly or indirectly controls, is
controlled by, or under common control with such entity."
3. Section 11.f., including subsections 11.f.i, ii and iii thereof, is hereby
amended and restated in its entirety to read as follows:
"f. Ninety (90) days prior to October 1, 1999, KMHP shall give written
notice to HRM of its intent to exercise its option to terminate any or all
of the Utilization Management services referred to in Section 3.b.(i) of
Amended Schedule 1 Fee Schedule to the Agreement, the QualityFIRST(R)
Guidelines, HRM's AutoPILOT services, and HRM's Resource Management
services, together with the respective fees for said services, at any time
on or after September 30, 1999, with no payment to be due HRM for the
terminated service(s) in connection therewith, except for those transition
costs specified in Section 3.a.v. of Amended Schedule 1 - Fee Schedule to
the Agreement. If KMHP chooses to continue any or all of the Utilization
Management services referred to in Section 3.b.(i) of Amended Schedule 1,
the QualityFIRST Guidelines, HRM's AutoPILOT services, and HRM's Resource
Management services, KMHP shall specify in its advance written notice to
HRM, as specified above, the service(s) it intends to continue and the date
upon which such service(s) is to terminate, if sooner than December 31,
2001. In the event the service(s) is to continue beyond September 30, 1999,
all fees except for Utilization Management will continue as specified
herein and, with respect to Utilization Management fees, KMHP and HRM will
mutually agree on the fees for Utilization Management within a reasonable
time following HRM's receipt of KMHP's written notice."
4. Section 21, entitled, "Changes Effective October 1, 1997," is hereby added
to the Agreement and shall read as follows:
"21. Changes Effective October 1, 1997
a. The parties will mutually develop and agree upon two (2) transition
plans which will be added to the Agreement in an amendment to be
executed at such time.
Transition Plan 1 will involve the plan to transition to KMHP certain
services which have been the subject of dispute. The reimbursement for
such services will be as agreed to in the Amended Schedule 1 - Fee
Schedule. Once the transition plan is agreed to, the fee schedule and
timings for these services will be adjusted to reflect those change in
services. The transition plan members for such services are (see
attachment). The transition team will finalize this transition plan to
be completed no later than November 15, 1997. This transition plan
will then be presented to the joint senior management committee
consisting of (see attachment). Final approval will be by the joint
senior management decision committee.
Transition Plan 2 will involve a transition team consisting of (see
attachment) will deliver to the senior management team of (see
attachment) a transition plan for transitioning the capitated managed
care services to KMHP at any time after October 1, 1998. On or before
December 23, 1997, the parties shall agree on the specific terms to be
included in a written Transition Plan to be appended to the Agreement.
The intent is to be able to have transitioned all of the capitated
services to KMHP no later than October 1, 1999. KMHP shall, at their
discretion, continue to have HRM perform the services beyond September
30, 1999, if they so choose. The transition plan will anticipate that
as any portion of the capitated services is transferred to KMHP prior
to September 30, 1999, there will be an adjustment to the fees payable
to HRM, but that HRM will be entitled to its full profit structure
that was anticipated for that service through September 30, 1999.
b. Claim Performance Standards. In the performance of the managed care
services under the Agreement, HRM and KMHP will perform such services
in a manner that will satisfy such performance standards as shall be
defined in a performance standards plan. The performance standards
plan will be developed by a team consisting of (see attachment). The
team will deliver the performance standards plan to the joint senior
management committee (consisting of (see attachment)) on or before
November 15, 1997. The performance standards plan shall include, among
others to be developed and agreed upon, the following standards:
i) Ninety-five percent (95%) of all authorizations will load to the
KMHP healthcare information system without critical errors on a
daily basis
ii) Ninety-eight percent (98%) accuracy rate on all authorizations
iii)Case Exception Report - 100% resolved within two (2) business days
iv) Certification Extract Report - 100% resolved within two (2)
business days
v) Authorization issues communicated from KMHP's Claims Department -
100% resolved within two (2) business days
vi) Audit and measurement standards and remedies for corrective
action in the event the performance standards are not being
achieved, which remedies would not be KMHP's exclusive remedies
and would not preclude the exercise of other rights.
With respect to the performance standards iii., iv., and v. set forth
above, HRM agrees to meet, commencing on the date hereof, such
performance standards when the ability to "resolve" such performance
standards is within HRM's control.
c. On or before November 1, 1997, the parties will mutually develop and
agree upon a written joint management process which will be added to
the Agreement in an amendment to be executed at such time. This
written joint management process shall address the following:
i) The management structure of how both parties will relate to each
other.
ii) A defined set of procedures to control the interface process
between all KMHP and all HRM affected operations. These
procedures will address, but not be limited to, HRM interfaces
with the following KMHP departments: IS, Claims,
Telecommunications, Regulatory Affairs, Member Services, and
Medical Affairs.
iii)Define the control of the HRM/Philadelphia staff and its'
relationship to the KMHP staff.
iv) Develop performance measures for:
(1) claims interface and claims turnaround between HRM/UM group
and the KMHP claims group.
(2) delineate the reporting processes and data fields
communication processes for the reporting of all activities
between HRM and KMHP.
(3) delineate the management issues and staffing of the HRM/
Philadelphia staff.
(4) delineate desirable and required features and performance
capabilities of AutoPILOT.
v) Provide KMHP with a diskette containing detailed line item
records used by HRM to create summaries for month-end close
information on inpatient cases.
d. On or before November 1, 1997, the parties will mutually develop and
agree upon more precise descriptions of each of the services
contemplated under the Agreement, the responsibilities of the parties
with respect thereto and performance standards thereof, including
those listed in Section 21.c.(iv) above. For each service provided,
the detail to be agreed upon may include, without limitation, the
telecommunications interfaces, HRM case manager processes, the data
fields to be filled out in AutoPILOT or the Mercy Healthcare System,
and the data fields to be transmitted on each case to KMHP claims.
These details, once agreed upon, will be added to this Agreement in an
amendment to be executed at such time and, thereafter, these
descriptions will constitute the extent of the service provided by
HRM. Any modifications desired or requested by KMHP or HRM for that
service will go through the change order process described below.
e. On or before November 1, 1997, the parties will agree on the use of a
change order process to be added to the Agreement by amendment to be
executed at such time and by which the parties will abide in
addressing changes to the services and responsibilities from and after
the adoption of said amendment.
f. HRM and all those who may claim under, by or through HRM, and all
affiliates of HRM, hereby release and forever discharge KMHP and its
successors, agents, owners, partners, affiliates, employees, officers,
directors and assigns of and from any and all claims, causes of
action, suits and demands whatsoever (except those with respect to
third party claims subject to indemnification under Section 12 of the
Agreement), which HRM now has or ever had against KMHP in connection
with or related to (i) the subject matters of a request for dispute
resolver list for arbitration filed by HRM with the NHLA Alternative
Dispute Resolution Service; (ii) payment by KMHP for, in connection
with, related to, or resulting from, the provision of services by HRM
except as expressly set forth in this Amendment No. 1; and (iii) any
alleged breaches of the Agreement by KMHP related to clauses (i) and
(ii) of this paragraph which occurred prior to the date of this
Amendment No. 1.
KMHP and all those who may claim under, by or through KMHP, and all
affiliates of KMHP, hereby release and forever discharge HRM and its
successors, agents, owners, partners, affiliates, employees, officers,
directors and assigns of and from any and all claims, causes of
action, suits and demands whatsoever (except those with respect to
third party claims subject to indemnification under Section 12 of the
Agreement), which KMHP now has or ever had against HRM in connection
with or related to (i) the subject matter of KMHP's alleged claims
against HRM as referenced in the letter of Xxxxxx X. Xxxxxx of KMHP to
Xxxx X. XxXxxxx, M.D. of HRM, dated September 5, 1997; (ii) payment by
HRM for, in connection with, related to, or resulting from the
rendering of services or the alleged failure to render appropriate
services, by HRM, except as expressly set forth in this Amendment No.
1; and (iii) any alleged breaches of the Agreement by HRM related to
clauses (i) and (ii) of this paragraph which occurred prior to the
date of this Amendment No. 1.
The parties further acknowledge and agree that the services, functions
and responsibilities performed by HRM through this date in connection
with the operations of KMHP and its affiliates are, among others,
included in the obligations, services and responsibilities of HRM
under the Agreement, as amended, and that HRM does not and will not
have any right to compensation for any services, functions and
responsibilities currently performed by HRM, except as set forth in
the Agreement, as amended and will not have any right to terminate any
such services, functions and responsibilities currently performed by
HRM, except as set forth in the Agreement, as amended.
g. Upon execution of this Amendment No. 1 to the Agreement, HRM will
withdraw, without prejudice, its request for arbitration filed with
the National Health Lawyers Association Alternative Dispute Resolution
Service on October 3, 1997.
h. On or before November 1, 1997, the parties will mutually agree upon
further amendments to the Agreement which are intended to:
i) replace ambiguous responsibilities to specific processes and
procedures;
ii) eliminate ambiguity in many of the breach of contract provisions;
and
iii)insert a mediation process prior to any arbitration process."
5. Schedule 1 - Fee Schedule to the Agreement is hereby amended and restated
as follows: (see attachment)
6. Reaffirmation of Agreement - Any and all provisions of the Agreement, other
than those modified and amended as set forth in this Amendment No. 1, shall
hereby remain in full force and effect. Any further amendment to the
Agreement shall be subject and pursuant to a definitive written document
executed by the parties hereto.
7. Counterparts. This Amendment No. 1 may be executed in one or more
counterparts, and each such counterpart shall be deemed part of the
original document. This Amendment No. 1 shall be binding upon the parties
hereto as of the Effective Date set forth above at such time as both
parties have executed a counterpart of this Amendment No. 1.
8. Facsimile Signatures. Original signatures of the parties hereto on copies
of this Amendment No. 1 transmitted by facsimile shall be deemed originals
for all purposes hereunder, and such copies shall be binding on the parties
hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment No. 1
to the Managed Care Service Agreement on the dates shown below.
HRM: KMHP:
HEALTH RISK MANAGEMENT, INC. KEYSTONE MERCY HEALTH PLAN
By /s/ XXXX XxXXXXX By /S/ XXXXXX X. XXXXXXXX
Its Chief Executive Officer Its President and Chief Executive Officer
Dated 10/9/97 Dated 10/09/97
