EXHIBIT 10.1
AMENDMENT
This Amendment to the June 1, 1997 Administrative Services Agreement
("Agreement") between Xxxxxxxx Health Systems, Inc. ("Plan") and Managed Care
Solutions, Inc., a Delaware corporation authorized as a New Mexico general
business corporation ("MCS") is entered into and is effective as of June 1,
1998.
For good and valuable consideration, the sufficiency of which is hereby
acknowledged, the parties hereby agree to amend the Agreement as follows:
1. Section 2.2.3, CLAIM PROCESSING AND PAYMENT, is amended to add the
following sentence between the existing first and second sentences:
"MCS shall further comply with Plan's "Standards for Delegation
of Payment Administration Activities", attached hereto as
Exhibit C."
2. Section 2.2.4 is amended by adding the following at the end thereof:
"Plan will maintain an adequate balance at all times in the bank
account established for use by MCS for payment of claims and MCS'
administrative fees. Failure to maintain an adequate balance, and
any penalties incurred as a result, will be the sole responsibility
of the Plan; provided, however, the parties will not consider it a
failure by Plan to maintain an adequate balance if MCS negligently
overpays claims or commits any other negligent action or inaction."
3. Section 2.2.6 is amended by adding a new subsection 2.2.6.7 to read as
follows:
"2.2.6.7. It is acknowledged that the Plan has an established
process for subrogation tracking and recovery. MCS will cooperate in
the development of a subrogation tracking and recovery program. The
program will require MCS to provide certain information to the Plan
for the purposes of tracking and recovering subrogated claims."
4. Section 2.2.7 is deleted in its entirety and replaced with the following:
"CASE MANAGEMENT. Plan shall be responsible for performing or
sub-contracting for all case management services. Case management
services shall encompass inpatient and outpatient case management
services as defined by HSD's case management benefit as set forth in
the contract between HSD and Plan."
5. Section 2.2.10 is deleted in its entirety and replaced with the following:
"UTILIZATION MANAGEMENT. MCS will submit a Utilization Management
program ("UM Program") annually to the Health Plan Operations
Workgroup ("HPOW") for review and approval. The UM Program shall
comply with Plan's contract with HSD (including HSD's independent
external quality review organization requirements), NCQA standards
and Plan's "Standards for Delegation of Utilization Management
Activities", attached hereto as Exhibit D. MCS shall maintain any
license required in connection with its UM Program activities, and
its UM Program shall comply with applicable law. MCS shall maintain
the UM Program under the supervision of Xxxxxxxx'x designated
Medical Director."
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6. The fourth sentence of Section 2.2.12.2, INFORMATION SYSTEMS, is revised
to read as follows:
"MCS has selected to use Managed Care One in fulfilling its duties
under this Agreement and may elect at any time in its sole
discretion to use a different information system; provided however,
that no disruption of Plan Program functions, increase in Plan
Program cost or reduction in Plan Program capability will result
from such decision."
7. Section 2.2.16 is deleted in its entirety and replaced with the following:
"COMPLAINT RESOLUTION PROCEDURE. MCS shall maintain a complaint
resolution procedure to process Member and Provider complaints that
shall comply with applicable law, Plan's contract with HSD
(including HSD's independent external quality review organization),
NCQA standards and, with respect to Member complaints, Plan's
"Standards for Delegation of Member Rights and Responsibilities
Function", attached hereto as Exhibit E."
8. The first sentence of Section 2.2.17.1, PROFESSIONAL LIABILITY INSURANCE,
is deleted and replaced with the following:
"During the term of this Agreement, Plan shall maintain, at its sole
expense, a policy of HMO-type professional liability insurance with
coverage limits in the minimum amount of $1,000,000 per incident and
$3,000,000 in the annual aggregate or such greater amounts as may be
required by applicable state or federal law."
9. A new Section 2.2.18 is added which provides in full as follows:
"MCS shall be responsible for administering programs for Early and
Periodic Screening, Diagnosis and Testing ("EPSDT") and Maternal and
Child Health (MCH) as defined by MCS and Plan."
10. Section 3.2. and subsections 3.3.1 through 3.3.14 are deleted and replaced
in their entirety as follows:
"3.2 OPERATIONAL PHASE-MANAGEMENT FEE. Plan shall pay MCS a
management fee for services performed under this Agreement in the
amount and according to the schedules listed in Exhibit A as
amended. MCS shall submit to plan on a monthly basis a statement
showing the estimated management fee determined in accordance with
Exhibit A as amended. In return for receiving the management fee,
MCS shall be responsible for all costs associated with
administration of the Plan, except for the following expenses, which
shall be the responsibility of the Plan:
3.2.1 Covered services; 3.2.2 Legal services of the Plan;
3.2.3 Actuarial services of the Plan;
3.2.4 All insurance and re-insurance premiums for the Plan;
3.2.5 Expenses relating to the corporate existence of the
Plan;
3.2.6 Any audit and tax services related to the operations
of the Plan;
3.2.7 Advertising and marketing related expenses of the
Plan;
3.2.8 Any income, property, premium or other taxes of the
Plan and any assessments or license fees of the Plan;
3.2.9 Other expenses clearly related to the business of the
Plan as an independent corporate entity or expenses
incurred by Xxxxxxxx Health Systems which relate to the
SALUD! program and are principally incurred for the
oversight of the Plan;
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3.2.10 Any costs associated with health assessment
administration, health education and plan promotion,
administration of all case management benefits as
defined by HSD, administration of all quality assurance
and quality management functions as they relate to
NCQA, JCAHO or HSD (including HSD's independent
external quality review organization) quality
requirements, credentialing, marketing, and Plan
compliance (including government relations, audit and
advocacy groups). Said costs relate to the Plan and its
staff and include, but are not limited to, capitalized
and non-capitalized computer equipment, office
equipment, furniture, software, office supplies,
office space for Plan staff, printing, copying, postage
(associated with quality management and case
management), contracted labor (including clerical,
word processing, and secretarial services), legal fees,
sub-contracted professional fees, wages (including
overtime wages), employee benefits, telephone line
leases, telephone, utilities, licenses, seminars and
all travel expenses for Xxxxxxxx Health System
employees, taxes, fees and all other expenses incurred;
3.2.11 Costs associated with Medical Director(s), including,
but not limited to, salaries and benefits;
3.2.12 Prescription benefit claims processing and payment."
11. A new Section 3.3 is added which provides in full as follows:
"3.3 HOLD HARMLESS. The payment rates specified in Exhibit A
shall be payment in full for all services provided under this
Agreement. MCS agrees that in no event, including but not limited to
nonpayment by Plan, insolvency of Plan or breach of this Agreement,
shall MCS xxxx, charge, collect a deposit from, seek compensation,
remuneration, or reimbursement from or have any recourse against a
Member, HSD or persons other than Plan for services provided
pursuant to this Agreement. This hold harmless provision shall
survive termination of this Agreement with respect to services
performed by MCS prior to termination of this Agreement."
12. Section 4.1 is deleted in its entirety and replaced with the following:
"4.1 TERM. This Agreement shall be effective on the date set
forth on the first page above and shall be effective during the
period necessary to complete the Plan's pre-operational activities
and shall then be in full force and effect through the first twenty
four (24) months of the Program. This Agreement shall automatically
renew for an additional consecutive twenty-four (24) month period
only if:
(i) the Plan, Xxxxxxxx Delivery System if it is an
insurer under applicable state law or any affiliate of CIGNA
Health Care and HSD mutually agree to extend the terms of
their SALUD! Medicaid Managed Care Services Agreement for any
additional term; and
(ii) MCS has achieved 90% overall compliance with the
performance standards as described in Exhibit B hereto for the
period October 1, 1998 through June 30, 1999. MCS shall
provide Plan with monthly reports in a format acceptable to
Plan reflecting its level of compliance with each of the seven
standards outlined in Exhibit B."
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13. A new section 4.2.5 is added which provides in full as follows:
"4.2.5 Material violation by either party of applicable HSD,
State or Federal requirements, as determined by the applicable
regulatory authority."
14. The first sentence of section 4.3.6 is revised to read as follows:
"The parties acknowledge that following termination of this
Agreement, MCS shall provide no services to Plan other than as
described in Sections 4.3.2 and 4.3.3, above."
15. A new section 4.3.7 is added which provides in full as follows:
"4.3.7 Notwithstanding anything else contained herein to the
contrary, the Plan shall not be required to purchase, take
possession, reimburse, pay, assume or be financially responsible in
any way as described in Sections 4.3.1 and 4.3.4 under the following
circumstances:
(i) The normal full term of this initial Agreement expires;
(ii) The Agreement is terminated by written mutual consent of
both parties pursuant to Section 4.2.1;
(iii) The Agreement is terminated by Plan for material breach
by MCS as described in Section 4.2.2; or
(iv) The Agreement is terminated pursuant to either Section
4.2.3 or 4.2.4.
In addition, MCS shall provide Plan on a quarterly basis with a
listing of fixed assets, leasehold improvements and program related
capitalized expenses at book value as described in Sections 4.3.1
and 4.3.4."
16. A new Section 4.3.8 is added which provides as follows:
"4.3.8 Notwithstanding anything else contained herein to the
contrary, in the event this Agreement is terminated because MCS
fails to achieve 90% overall compliance with the performance
standards as described in Section 4.1(ii) and Exhibit B, the Plan
shall only be required to (i) purchase the leasehold improvements
acquired and used by MCS to administer the Plan at a price
determined in accordance with Section 4.3.1 and (ii) assume and/or
be fully financially responsible for any lease of office space being
utilized for Plan operations. Accordingly, except as described in
the preceding sentence, the Plan shall not be required to purchase,
take possession, reimburse, pay, assume or be financially
responsible in any way as described in Sections 4.3.1 and 4.3.4 for
termination of this Agreement under such circumstances."
17. Section 5.1 is deleted in its entirety and replaced with the following:
"5.1 CONFIDENTIALITY. MCS agrees to safeguard the
confidentiality of all data pertaining to this Agreement, Covered
Services rendered to Members and Member information in accordance
with HSD requirements and State and Federal law."
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18. Section 5.11 is amended to add at the end the following two sentences:
"MCS shall further provide authorized representatives of HSD with
reasonable access to facilities and records pertaining to the Plan
for financial and medical audit purposes. MCS shall release to Plan
any information pertaining to the Plan necessary for Plan to perform
any of its obligations under its agreement with HSD."
19. Article V is amended by adding a new Section 5.14 thereto to read as
follows:
"5.14 LONG TERM CARE PROGRAM.
5.14.1 If MCS obtains a Health Maintenance Organization
("HMO") license in New Mexico in order to qualify to submit a
proposal to participate in a Long Term Care (LTC) program
established and authorized by the State of New Mexico, the
Plan would agree (unless constrained from doing so by
applicable law) not to submit a bid to participate in the LTC
program without MCS's consent. Upon request by the Plan, MCS
will include, as part of its LTC provider network components
of the Plan's provider network as requested by the Plan, and
will compensate the Plan network for such services at no less
than the prevailing Medicaid reimbursement rates or other
reimbursement rates that MCS negotiates with the Plan.
5.14.2 If MCS decides not to apply for an HMO license,
then MCS will have the right to assist the Plan in the
preparation of a bid for an LTC contract with the State and to
provide administrative services to the Plan in connection with
such contract; provided, however, that the Plan shall have
sole authority to determine whether to submit a bid for an LTC
contract and to determine all details concerning such bid. If
the Plan is awarded the bid, the Plan shall compensate MCS for
such administrative services on a capitated basis and will
contract with MCS to share risk for medical expenses. LHS
shall allow MCS the power and authority to control medical
expenses in its capacity as administrative agent. The parties
shall negotiate the extent to which MCS shall assume such
financial risk.
5.14.3 MCS will in either case meet the all applicable
capital, reserve and net work requirements. Should the State
of New Mexico decide to utilize a contract to administer an
LTC program, MCS may, except as otherwise provided above,
participate directly with the State independently of the Plan.
Notwithstanding anything else contained herein to the
contrary, the terms and provisions of this Section 5.14 shall
survive the date of termination of this contract for a period
of two years."
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20. Exhibit A to the Agreement is deleted in its entirety and replaced with
the following:
MCS MANAGEMENT FEE SCHEDULE
Period PMPM Management Fee
6/1/98 through 6/30/99 $[ ]*+
7/1/99 through 6/30/00 $[ ]**+
7/1/00 through 6/30/01 $[ ]**+
* If the Agreement is terminated by Plan prior to 1/1/99 for any
reason other than a material breach of contract by MCS or HSD
request, Plan will make a retroactive payment to MCS of an
amount equal to the difference between this rate and rate
which would have applied under Exhibit A to the original
Agreement prior to execution of this Amendment for the period
from the Effective Date of this Amendment through the
termination date.
** The rate structure for the period 7/1/99 through 6/30/01 is
applicable only if the Agreement is renewed for any period as
described in Section 4.1, as amended.
Except as modified above, the terms and conditions of the Agreement remain in
full force and effect.
XXXXXXXX HEALTH SYSTEMS, INC. MANAGED CARE SOLUTIONS, INC.
By /s/ Xxxxxx Xxxxxx, M.D. By /s/ Xxxxxxx X. Xxxxxxx
-------------------------------- -------------------------------
Signature of Authorized Agent Signature of Authorized Agent
Xxxxxx Xxxxxx, M.D. Xxxxxxx X. Xxxxxxx
-------------------------------- -------------------------------
Typed or Printed Name Typed or Printed Name
Its Chief Executive Officer Its: Senior Vice President
-------------------------------- -------------------------------
Title Chief Executive Officer Title Senior Vice President
-------------------------------- -------------------------------
Date: 12/24/98 Date: 12/29/98
-------------------------------- -------------------------------
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+Confidential treatment requested
