EXHIBIT 10.2
HEALTH SERVICES AGREEMENT
by and between
HIP OF NEW JERSEY, INC.,
and
PINNACLE HEALTH ENTERPRISES, L.L.C.
Dated as of July 24, 1997
PORTIONS OF THIS EXHIBIT MARKED BY "*" HAVE BEEN OMITTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT. THE OMITTED PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.
HEALTH SERVICES AGREEMENT
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THIS HEALTH SERVICES AGREEMENT (the " Agreement") is dated as of the
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24th day of July, 1997, by and between HIP of New Jersey, Inc., a New Jersey
not-for-profit corporation (the "Plan"), and Pinnacle Health Enterprises,
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L.L.C., a Delaware limited liability company ("PHE").
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WITNESSETH:
WHEREAS, the Plan is a federally qualified and state certified health
maintenance organization conducting business under the name of "HIP Health Plan
of New Jersey" and provides, or arranges for the provision of, Covered Services
for Covered Persons; and
WHEREAS, PHE is an Integrated System of Care(R) or ISOC(R) comprised of
PHE Providers in the State, and is authorized to contract on their behalf with
managed care plans, and coordinate the delivery of, and reimbursements for, a
continuum of health care services; and
WHEREAS, the Plan wishes to have PHE, through its ISOC(R), arrange for
the delivery of Covered Services to Covered Persons enrolled in the Plan's
Coverage Plans on the terms and conditions set forth herein; and
WHEREAS, PHE and PINNACLE MEDICAL GROUP, P.A., a New Jersey
professional corporation (the "Medical Group") have entered into a Medical
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Services Agreement dated as of February 28, 1997 and annexed hereto as Exhibit A
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pursuant to which Physicians and other Providers agree to provide Covered
Services for Center Covered Persons; and
WHEREAS, through a series of Provider Agreements entered into and to be
entered into by PHE with Providers throughout the State, PHE has developed and
will develop a network pursuant to which Physicians and other Providers can
provide Covered Services to Covered Persons; and
WHEREAS, the effectiveness of this Agreement is contingent upon the
consummation of the transactions related to this Agreement, including the
receipt of all necessary governmental approvals and consents in connection
herewith.
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
SECTION 1 - DEFINITIONS
As used herein, the terms below shall have the following meanings:
"Accreditation Agency" means any non-governmental accreditation agency,
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including without limitation NCQA, which monitors, audits, accredits or performs
other similar functions with respect to health maintenance organizations and
other managed care organizations.
"Affiliate" means, with respect to any Person, any other Person that directly or
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indirectly controls, is controlled by, or is under common control with such
Person. For purposes of this definition, "control" means either:
(a) the possession, directly or indirectly, of the power to direct
or to cause the direction of the management of the affairs of a
Person or the conduct of the business of a Person; or
(b) the holding of a direct or indirect equity or voting interest of
50% or more in the Person.
PHP and the Medical Group shall each be deemed to be an Affiliate of PHE.
"Agreement" means this Health Services Agreement between the Plan and PHE,
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including all exhibits and attachments hereto, as the same may be amended from
time to time in conformity herewith.
"ASO" means administrative services only.
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"Capitation Payments" means the payments described in Attachment 1.1 to be made
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by the Plan to PHE for Covered Services.
"Centers" means, collectively, the Health Care Centers and any other health care
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centers which were not previously owned or operated by the Plan and currently
are or hereinafter will be owned or operated by PHE or one of its Affiliates,
including without limitation Medical Group, within the State to provide or
arrange for the provision of health care services.
"Center Covered Persons" means any Person entitled to Covered Services under his
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or her Coverage Plan, or any other Person designated by the Plan, who has
elected or been designated to receive primary care Covered Services at the
Centers.
"Claim" and "Claim Notice" have the meanings given to such terms in Section 5.3.
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"Closing Date" means the date of the closing of all transactions between the
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Plan and PHE and its Affiliates related to this Agreement.
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"Coinsurance" means the amount (expressed as a percentage) of allowable expenses
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payable by a Covered Person for the cost of Covered Services, including those
amounts payable pursuant to an out-of-network benefit or an indemnity or POS
Coverage Plan.
"Copayment" means those charges permitted under a Covered Person's Coverage Plan
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which should be collected directly by Physicians or Health Care Providers from a
Covered Person as partial payment for Covered Services.
"Coverage Plan" means a plan of health care coverage that is provided or
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administered by the Plan or its Affiliates for:
(a) one or more employers or other groups through contracts,
including but not limited to insurance contracts, health
maintenance organization contracts, POS contracts, employer
funded or ASO contracts, or any other plan provided or
administered by the Plan or its Affiliates; or
(b) one or more individuals through contracts such as health
maintenance organization contracts or Medicare or Medicaid
contracts.
"Covered Person" means, collectively, Center Covered Persons and Network Covered
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Persons.
"Covered Services" means all Medically Necessary health care services and
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supplies covered under and in accordance with the terms (including any required
preauthorization) of the applicable Coverage Plan, or as required by applicable
law, rules or regulations, for Covered Persons.
"Covering Physician" means (a) in the case of Covered Services provided to
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Center Covered Persons, a Physician chosen directly or indirectly by PHE or the
Medical Group, and (b) in the case of Covered Services provided to Network
Covered Persons, a Physician who is either a PHE Provider [********************
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who is to provide Covered Services to Covered Persons during a time period when
a Covered Person's regular PHE Provider is not available.
"Credentialing" means a process by which the professional credentials and
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professional qualifications of Physicians, and, if applicable, Health Care
Providers are reviewed, both prior to first providing Covered Services to
Covered Persons and periodically thereafter, to determine whether or not they
meet the Plan's requirements for providing or arranging for Covered Services to
Covered Persons under Coverage Plans. This term specifically includes
recredentialing.
"Deductible" means the portion of the cost of Covered Services which a Covered
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Person must pay before the Plan is obligated to pay for such Covered Services.
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"Delegation Agreement" means the delegation agreement in the form annexed hereto
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as Attachment 1.2 to be entered into between Plan and PHE on the Closing Date.
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"Delegated Functions" means those administrative and medical management
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functions which PHE shall perform or cause to be performed on behalf of the Plan
pursuant to the Delegation Agreement.
"Edison Health Care Center" means the health care center located at 312 ▇▇▇▇▇▇▇
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Avenue in Edison, New Jersey which shall be conveyed by the Plan to PHE.
"Effective Date" means (a) if the Closing Date shall be on or before the 15th
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day of a month, the first day of such month, or (b) if the Closing Date shall be
after the 15th day of a month, the first day of the next succeeding month, or
(c) such other date as is mutually agreed upon by the Plan and PHE.
"Emergency" means a medical condition manifesting itself by acute symptoms of
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sufficient severity including, but not limited to, severe pain, psychiatric
disturbances and/or symptoms of substance abuse such that absence of immediate
attention could reasonably be expected to result in: placing the health of the
individual (or, with respect to a pregnant woman, the health of the woman or her
unborn child) in serious jeopardy; serious impairment to bodily functions; or
serious dysfunction of a bodily organ or part. With respect to a pregnant woman
who is having contractions, an emergency exists where: there is inadequate time
to effect a safe transfer to another hospital before delivery; or the transfer
may pose a threat to the health or safety of the woman or the unborn child.
"Exclusive Health Care Centers" means those Centers so designated in Attachment
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1.3.
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"Financial Risk" has the meaning given to such term in N.J.A.C. 8:38-1.2, as
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amended from time to time.
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"Force Majeure" has the meaning given to such term in Section 7.14.
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"Health Care Centers" means those health care centers, listed in Attachment 1.3,
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which PHE will lease and, in the case of the Edison Health Care Center, which
will be conveyed to PHE by the Plan, which will be staffed by Medical Group to
provide Covered Services as described in this Agreement.
PORTIONS OF THIS EXHIBIT MARKED BY "*" HAVE BEEN OMITTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT. THE OMITTED PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.
3
"Health Care Provider" means an individual or organization (other than a
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Physician, Supplier, or Institutional Care Facility) who or which is certified,
licensed or otherwise recognized to provide health care services in the state
where such services shall be furnished.
"Institutional Care Facility" means a hospital, acute care facility, sub-acute
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care facility, rehabilitation facility, skilled nursing care facility, or other
institution which:
(a) provides facilities for inpatient and/or outpatient health
care services; and
(b) has all necessary licenses, approvals and authorizations to
operate as such a facility.
"Losses" has the meaning given to such term in Section 5.3.
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"Managed Care Organization" means any of the following (other than the Plan or
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its Affiliates): (a) any health maintenance organization; (b) any comprehensive
medical plan; (c) an exclusive provider organization; or (d) any Person other
than PHE or its Affiliates offering or operating a point-of-service plan, or
preferred provider organization.
"Medical Group" means Pinnacle Medical Group, P.A., a New Jersey professional
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corporation.
"Medical Services Agreement" means the agreement between PHE and Medical Group,
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annexed hereto as Exhibit A.
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"Medically Necessary" means any health care service or supply provided by a
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Provider for the diagnosis or treatment of a Covered Person's condition and
which the Plan determines is:
(a) consistent with the symptoms, diagnosis and treatment of the
Covered Person's condition;
(b) in accordance with standards of good medical practice;
(c) not primarily for the convenience of the Covered Person, the
Covered Person's family, or his or her Provider; and
(d) approved by the appropriate medical body or board for the
Covered Person's condition.
"NCQA" means the National Committee for Quality Assurance.
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"Network Covered Persons" means any person entitled to Covered Services under
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his or her Coverage Plan, or any other Person designated by the Plan, who has
elected or been designated to receive primary care Covered Services through a
PHE Provider, and who is not a Center Covered Person.
4
"Non-Covered Services" means those health care services and supplies which:
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(a) are not covered under the terms of a Covered Person's Coverage
Plan, and are, therefore, the financial responsibility of the
Covered Person; or
(b) if a Covered Service, the total cost of such Covered Service
which exceeds the limitations set forth in the Covered
Person's Coverage Plan, and which excess amount is, therefore,
the financial responsibility of the Covered Person.
"Non-Exclusive Health Care Centers" means those Health Care Centers so
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designated in Attachment 1.3 or determined pursuant thereto.
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"Person" means a natural person, partnership (general or limited), corporation,
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limited liability company, trust, estate, association or other entity.
"PHE" means Pinnacle Health Enterprises, L.L.C., a Delaware limited liability
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company.
"PHE Provider" means Medical Group and a Provider who has agreed to provide
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Covered Services to Covered Persons pursuant to:
(a) an employment agreement or other contractual arrangement
which it has entered into with Medical Group;
(b) a Provider Agreement which it has entered into or under which
it is covered with PHE; or
(c) is a Plan Provider who is deemed to have entered into a
Provider Agreement with PHE and who the Plan and PHE have
agreed shall continue to provide Covered Services to Covered
Persons.
"PHP" means PHP Healthcare Corporation, a Delaware corporation.
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"Physician" means a person licensed to practice medicine or osteopathy in a
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state where such person practices or a professional corporation or other
business entity of such persons.
"Physician Incentive Plan" has the meaning specified in 42 C.F.R. (S)417.479, as
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amended from time to time.
"Plan" means HIP of New Jersey, Inc. and its successors and permitted assigns.
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"Plan's Medical Director" means the Physician identified by the Plan (and his or
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her designees) whose responsibilities include the oversight of the protocols and
procedures constituting the Provider Guide as well as other medical management
programs and such other responsibilities as determined by the Plan from time to
time.
5
"Plan Provider" means a Provider who, as of the Effective Date, is not a PHE
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Provider, and is under a contractual arrangement with Plan.
"POS" means point of service.
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"Primary Care Physician" means a Physician who is a PHE Provider:
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(a) specializing in family practice, general practice, internal
medicine, or pediatrics; and
(b) who is chosen by a Covered Person, or to whom a Covered
Person is assigned, to:
i) provide initial and primary medical care;
ii) maintain the continuity of that medical care;
iii) initiate referrals to Specialty Care Physicians and
other Health Care Providers who are Plan Providers
or PHE Providers; and
iv) arrange and coordinate all Covered Services for
Covered Persons who have selected or been assigned
to such Primary Care Physician pursuant to this
Agreement.
"Provider" means a Health Care Provider, Institutional Care Facility, Physician,
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or Supplier.
"Provider Agreement" means a contractual arrangement between a Provider and PHE,
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other than the Medical Services Agreement, whereby such Provider agrees to
provide or arrange, inter alia, for the provision of some or all Covered
Services to Covered Persons. A copy of the model Provider Agreement with a
Physician is annexed hereto as Exhibit B.
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"Provider Guide" means the protocols and procedures developed by the Plan which
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PHE shall cause all PHE Providers to follow with respect to the provision of
Covered Services, as modified from time to time in accordance with this
Agreement.
"Quality Improvement" means the continuous quality improvement program to
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monitor the quality and appropriateness of care and services provided to Covered
Persons.
"Risk Management" means that part of the Quality Improvement process involving
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the reduction and/or prevention of losses and injuries to Covered Persons and
employees, for identification, analysis, and evaluation of areas of potential
loss, and for review of specific incidents (both reported and unreported).
"Specialty Care Physician" means a Physician who:
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6
(a) provides certain specialty medical care to Covered Persons
upon referral by a Primary Care Physician; and
(b) is a PHE Provider.
"State" means the State of New Jersey.
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"Substantial Financial Risk" has the meaning specified in 42 C.F.R. (S)417.479,
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as amended from time to time.
"Supplier" means a Person who provides health care related products and services
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and who has all necessary licenses, permits and authority to provide such
products and services.
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"Urgent Care" means a non-life-threatening condition that requires care by a
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Provider within twenty-four (24) hours.
"Utilization Management" means that part of the Quality Improvement process that
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involves a comprehensive effort to monitor access to and appropriate utilization
of health care and services.
SECTION 2 -
INDEPENDENT CONTRACTOR-RELATIONSHIP OF PARTIES;
REPRESENTATIONS AND WARRANTIES OF PARTIES
2.1 Independent Contractors. The Plan and PHE are independent contractors
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and separate legal entities. The relationship between the Plan and PHE
is reflected in this Agreement, and neither the Plan, PHE, nor the
employees, servants, agents or representatives of either, shall be
considered the employee, servant, agent or representative of the other.
None of the provisions of this Agreement are intended to create or to
be construed as creating any agency, partnership, joint venture or
employer-employee relationship between or among the Plan, PHE or any of
their respective employees, servants, [****] or representatives.
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2.2 Physician-Patient Relationship. PHE shall, and shall cause Medical
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Group to, require in their Provider Agreements that each PHE Provider
acknowledge and agree that such PHE Provider is solely responsible for
all decisions regarding the medical care and treatment of Covered
Persons and that the traditional relationship between physician
PORTIONS OF THIS EXHIBIT MARKED BY "*" HAVE BEEN OMITTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT. THE OMITTED PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.
7
and patient shall in no way be affected by the terms of this Agreement,
the Medical Services Agreement or the Provider Agreement,
notwithstanding the fact that the Plan is ultimately responsible for
determinations concerning claims, Utilization Management, coverage and
benefit payment issues. Any determination by the Plan or PHE denying
approval for a particular health care service shall not relieve said
Provider from providing or recommending such service if it deems it
appropriate.
2.3 Non-Covered Services. Subject to the provisions of Section 2.2 hereof
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and applicable law, PHE shall not be required hereunder to arrange for,
and PHE Providers shall not be required to provide, any health care
services not explicitly identified as Covered Services.
2.4 Subcontracts. [***************************************************
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2.5 Representations and Warranties of PHE. PHE represents and warrants to
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the Plan that:
(a) PHE Good Standing - PHE is a Delaware limited liability
company, duly organized, existing, in good standing under and
by virtue of the laws of the jurisdiction of its organization.
PHE is, and shall remain during the initial and all subsequent
terms of this Agreement, in good standing under applicable
Federal and State statutes and regulations governing its
existence and operation, including any applicable insurance,
health maintenance organization, preferred provider
organization, and utilization review licensing statutes and
regulations.
(b) PHE Provider Good Standing - As of the Effective Date, each
PHE Provider is, to the best of PHE's knowledge, in good
standing under applicable statutes, regulations, and
accreditation standards governing his, her, or its practice,
existence, and operation, including licensing statutes and
regulations. PHE shall use its best efforts to ensure that all
PHE Providers remain in good standing under applicable
statutes and regulations, including licensing statutes and
regulations, during the initial and all subsequent terms of
this Agreement and their respective Provider Agreements.
(c) Future Provider Agreements - PHE shall not execute a Provider
Agreement
PORTIONS OF THIS EXHIBIT MARKED BY "*" HAVE BEEN OMITTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT. THE OMITTED PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.
8
with any Physician or Provider, and shall cause Medical Group
not to employ or otherwise contract with any Physician or
Provider as of the Effective Date, unless such Physician or
Provider is in good standing under applicable statutes,
regulations, and accreditation standards governing his, her,
or its practice, existence, and operation, including licensing
statutes and regulations, on the date that he, she, or it
executes such Provider Agreement.
(d) [**********************************************************
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2.6 Representations and Warranties of the Plan. The Plan represents and
------------------------------------------
warrants to PHE that:
(a) Plan Good Standing - The Plan is a New Jersey not-for-profit
corporation duly organized, existing, in good standing under
and by virtue of the laws of the State.
(b) Compliance - The Plan is a federally qualified and State
certified health maintenance organization, shall maintain its
license and certifications, shall comply with all applicable
State and Federal statutes and regulations, is in compliance
with applicable State and Federal statutes and regulations and
shall continue such compliance during the initial and all
subsequent terms of this Agreement.
(c) Coverage Plans - Exhibit C to this Agreement includes a copy
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of each standard form of Coverage Plan filed by the Plan with
the State Department of Banking and Insurance or the State
Department of Health and Senior Services.
PORTIONS OF THIS EXHIBIT MARKED BY "*" HAVE BEEN OMITTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT. THE OMITTED PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.
9
(d) [************************************************************
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(f) [***********************************************************
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(g) Contractor Information -
(i) Delegated Functions - The Plan has provided PHE
with a complete list and copies of any written
contracts entered into with Providers and other
Persons currently performing Delegated
Functions. Such list is attached hereto as
Attachment 2.6. [************************
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(ii) Administrative Functions, and Capitated or
Exclusive Relationships in Health Care Centers-
The Plan has provided PHE with a complete list
and copies of any written contracts, as well as
a description of any oral contracts, entered
into with Providers and other Persons
performing administrative functions, other than
Delegated Functions, or currently providing
services which shall be deemed to be Covered
Services
PORTIONS OF THIS EXHIBIT MARKED BY "*" HAVE BEEN OMITTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT. THE OMITTED PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.
10
under this Agreement, under a capitated or
exclusive relationship. Such list is attached
hereto as Attachment 2.6. [******************
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**************] For those administrative
functions described in this subsection (ii)
which shall be assumed by PHE hereunder, at
the time PHE assumes the responsibility for
such functions, the assumption shall not be in
violation of any agreement the Plan has with
any other Person to perform such
administrative functions.
(iii) [********************************************
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SECTION 3 - RESPONSIBILITIES AND OBLIGATIONS OF PHE
3.1 Provision of Covered Services through the ISOC(R).
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(a) [*******************************************************] PHE,
through the PHE Providers, shall have the exclusive right and
obligation to arrange for the delivery of Covered Services to
Covered Persons. PHE agrees that it will (i) arrange for the
provision of Covered Services (x) at all Centers pursuant to
its contractual relationship with Medical Group, as set forth
in the Medical Services Agreement, and (y) through other PHE
Providers pursuant to the Provider Agreements entered into by
PHE with each such PHE Provider; and (ii) manage the rendering
of all Covered Services to Covered Persons, [*******
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PORTIONS OF THIS EXHIBIT MARKED BY "*" HAVE BEEN OMITTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT. THE OMITTED PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.
11
(b) PHE shall be responsible for confirming whether Covered
Persons are eligible for Covered Services by using the
eligibility information and system provided by the Plan in
accordance with Section 4.3.
(c) PHE shall cause PHE Providers to provide health care services
of a quality that, at a minimum, is consistent with accepted
medical and surgical practices in the State.
(d) PHE shall cause PHE Providers to provide health care services
that are generally recognized as being within their medical
and specialty training.
(e) PHE may on its own behalf or on behalf of Medical Group
transfer the care of a Covered Person from one Primary Care
Physician to another Primary Care Physician upon demonstrating
to the satisfaction of Plan's Medical Director that the
original Primary Care Physician is unable to maintain a
satisfactory Physician-patient relationship with the Covered
Person. If the Plan's Medical Director grants such request,
the transfer shall be accomplished at an appropriate time and
in such a manner so as to not constitute the abandonment of
the Covered Person.
(f) PHE shall cause Medical Group and PHE Providers to provide
sufficient support staff to enable Covered Persons to receive
the health care services that are generally recognized and
accepted as being within the Physician's medical practice and
specialty. All such support staff must be duly licensed as may
be required by State law, rules and regulations.
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PORTIONS OF THIS EXHIBIT MARKED BY "*" HAVE BEEN OMITTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT. THE OMITTED PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.
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3.2 Covered Persons' Access To Care.
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(a) PHE shall ensure that all Covered Services, including Emergency
services and Urgent Care (including call coverage services) shall
be available and accessible to Covered Persons (including
telephone access) on a twenty four (24) hours per day, seven (7)
days a week basis. In order to ensure access to such Covered
Services, including Emergency services and Urgent Care, PHE shall
cause PHE Providers to make arrangements with Covering Physicians
and to ensure that Covering Physicians abide by all of the terms
and conditions of this Agreement and the Provider Agreements
pertaining to the provision of Covered Services including for
Covered Persons eligible for Medicaid and Medicare. PHE shall
cause PHE Providers to comply with the Plan's call coverage
standards as described in the Provider Guide.
(b) PHE shall: (i) maintain an adequate panel of PHE Providers to
provide timely service to Covered Persons; (ii) diligently pursue
and arrange for the provision of an adequate number of PHE
Physicians to support any increase in the number of Covered
Persons; and (iii) assure timely access to Covered Services for
Covered Persons. Timely access and service is defined by access
and service standards outlined in Attachment 3.2.
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(c) The availability and accessibility of Covered Services to Covered
Persons is further subject to PHE causing PHE Providers to meet
the standards and provisions of the Plan's Quality Improvement
program, pursuant to the terms of the Delegation Agreement.
(d) [****************************************************************
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3.3 Performance Standards. PHE agrees to meet or exceed the performance
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standards to be outlined in Attachment 3.3, as such standards may be
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amended from time to time upon mutual written consent of the parties,
including for reasons related to newly adopted or revised regulatory or
Accreditation Agency Standards or requirements, or for competitive
market reasons, as mutually acknowledged by the parties. The parties
shall agree upon the timing, measurement tools, authority to measure,
performance scales, and notice and cure periods applicable to all
performance standards required of PHE. [*****************************
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PORTIONS OF THIS EXHIBIT MARKED BY "*" HAVE BEEN OMITTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT. THE OMITTED PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.
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3.4 Compliance With Laws and Participation in Programs.
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(a) PHE agrees that it shall, and shall cause PHE Providers to comply
with all applicable Federal and State laws, rules and regulations
in the provision of Covered Services to Covered Persons. PHE
agrees that a comprehensive program for monitoring utilization
and quality of service, and other aspects of the delivery system
is necessary. Therefore, PHE shall, and shall cause the PHE
Providers to comply with, participate in and cooperate with the
Plan's programs [********************************************
*********************] including but not limited to referral
authorization and precertification procedures, Credentialing
policies and procedures, Risk Management, Utilization Management
[*************************************************************
*************************************************************]
Quality Improvement programs, peer review, Covered Person
complaint resolution, case management, and all of the standards
and rules constituting the Provider Guide. PHE shall, and agrees
that it shall cause PHE Providers to, be bound by and comply with
all final determinations rendered by Covered Person complaint
resolution and peer review process maintained by the Plan. PHE
also agrees to participate in and cooperate with the programs and
other mechanisms that are used by the Plan to enhance and monitor
the quality and cost effectiveness of Covered Services.
(b) PHE shall: (i) prohibit any Provider who fails to meet the
standards set forth in the Plan's Credentialing, Quality
Improvement, Risk Management, and Utilization Management programs
from providing Covered Services to Covered Persons; and (ii)
prohibit any Provider from providing Covered Services to Covered
Persons if the Plan reasonably determines that the health or
safety of Covered Persons will be endangered. [******************
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PORTIONS OF THIS EXHIBIT MARKED BY "*" HAVE BEEN OMITTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT. THE OMITTED PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.
14
(c) PHE shall cause PHE Providers to comply with the rules
established by the Plan's Medical Director and the Plan regarding
the utilization of Covered Services, and abide by all of the
protocols and procedures constituting the Provider Guide.
(d) [*******************************************************
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3.5 Health Care Centers; Other Facilities and Arrangements.
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(a) [****************************************************************
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(b) During the term hereof, so long as PHE is in compliance with its
obligations hereunder, Plan agrees that PHE shall have the
exclusive right to arrange for delivery of Covered Services to
Covered Persons.
(c) [***************************************************************
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PORTIONS OF THIS EXHIBIT MARKED BY "*" HAVE BEEN OMITTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT. THE OMITTED PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.
15
(d) PHE shall not directly solicit the Plan's current customers or
any Plan prospective customer [********************************
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(e) [***********************************************************
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(f) [***************************************************************
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(g) [********************************************************
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PORTIONS OF THIS EXHIBIT MARKED BY "*" HAVE BEEN OMITTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT. THE OMITTED PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.
16
[**************************************************************
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3.6 Provider Agreements.
(a) PHE has two basic models of PHE Provider Agreements; one for
Medical Group, which is the Medical Services Agreement, and one
for other PHE Providers, which is the Provider Agreement. The
form of the Medical Services Agreement is annexed as Exhibit A,
and the model form of Provider Agreement is annexed as Exhibit B.
These forms are approved by all applicable governmental
authorities and Accreditation Agencies (to the extent required).
PHE shall have the right to modify these agreements, [*******
*****************************************************************
**************] PHE shall provide the Plan with prior notice of
any material changes to the model forms described herein and any
changes required by law or regulation. [*********************
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**************************************************************]
PHE hereby represents and warrants, and has secured from Medical
Group in the Medical Services Agreement and will secure from
other Providers in the Provider Agreement, their representation
and warranty, that it has the authority to bind the Medical Group
and Providers, and that it will require the Medical Group and
Providers to comply with the applicable provisions of this
Agreement, [*****************************************************
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(b) PHE's arrangements with PHE Providers shall (i) require that
Physicians do not provide Covered Services to Covered Persons
until each has been credentialed pursuant to the Plan's
Credentialing program and approved by the Plan as set forth in
the Delegation Agreement; and (ii) require best efforts to
provide the Plan with written notice of each new Physician within
five (5) business days after such Physician has entered into a
Provider Agreement or is affiliated with the Medical Group under
the Medical Services Agreement.
PORTIONS OF THIS EXHIBIT MARKED BY "*" HAVE BEEN OMITTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT. THE OMITTED PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.
17
(c) PHE shall, and shall cause PHE Providers to, provide the Plan
with not less than forty-five (45) business days notice of the
termination, resignation or withdrawal of any Provider who is
providing a course of treatment to a Covered Person; provided,
however that notice provided by PHE within ten (10) business days
of receipt of notice of such event by PHE shall be deemed to be
compliance with the provisions of this Section 3.6(c).
Notwithstanding the foregoing, such prior notice may be waived
where immediate termination is necessary for the protection of
health, safety and welfare of Covered Persons. PHE shall, and
shall cause PHE Providers to, provide written notice, within five
(5) days after the occurrence thereof, of any such immediate
termination or any suspension of any Provider.
(d) PHE shall, or PHE shall cause PHE Providers to, notify the Plan,
in writing, immediately upon becoming aware of any of the
following actions taken by or against a Physician:
i) the surrender, revocation or suspension of a Physician's
medical license, or a current DEA registration or state
narcotics license or controlled dangerous substance
certification;
ii) the restriction, suspension or revocation of a Physician's
medical staff privileges at any Institutional Care
Facility;
iii) the filing of a report with the National Practitioner Data
Bank or State professional medical disciplinary board, if
applicable;
iv) receipt by a Physician of a notice of intent to commence
or the commencement, settlement or entry of judgment of
any malpractice claim;
v) any lapse or material change in a Physician's professional
liability insurance required by this Agreement;
vi) any indictment, arrest or conviction for a felony or any
criminal charge, or the commencement of any proceeding,
inquiry or investigation, including a grand jury
investigation relating thereto;
vii) the filing of any complaint or institution of any action,
inquiry, investigation or disciplinary proceeding by the
New Jersey Board of Medical Examiners, the New Jersey
Department of Health and Senior Services or any similar
regulatory or governmental authority of the State or any
medical board, peer review organization, Medicare or
Medicaid agency hospital committee or other committee,
organization or body which reviews quality of medical
care;
viii) the failure of a Physician to meet the Plan's
Credentialing policies;
18
ix) the sanction or expulsion of a Physician from
participation in Medicare or Medicaid;
x) the failure in any material respect of a Physician to
comply with the provisions of this Agreement or the
applicable Medical Services or Provider Agreement; or
xi) or any other circumstance which would materially affect a
Physician's ability to carry out his or her duties and
obligations under this Agreement, or the applicable
Medical Services or Provider Agreement or which would
materially change the representations made in Physician's
Credentialing application.
(e) The Plan shall have the right to require that any Physician with
respect to whom an event described in Section 3.6(d) has occurred
immediately cease providing Covered Services for Covered Persons.
[*******************************************************
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(f) Without limiting the foregoing, in all cases, PHE's arrangements
with PHE Providers shall prohibit any Provider who has been
sanctioned or expelled from participation in Medicaid or Medicare
from rendering Covered Services to Covered Persons in those
programs. PHE shall provide notice to Plan of any action taken by
PHE under this Section 3.6(f).
(g) PHE agrees that if it receives written notice from the Plan
setting forth specific concerns of the Plan about the failure of
a Physician to comply with Plan policies and procedures,
credentialing criteria, Provider Agreement, Physician employment
requirements, PHE shall, or, if the subject Physician's
participation is with Medical Group, shall cause Medical Group
to, within five (5) business days of its receipt of such notice,
meet with a representative of the Plan to discuss the Plan's
concerns. The parties shall use their best efforts to resolve any
problems identified through measures which may include, but are
not limited to, enhanced communication between the parties, or
the establishment of a joint PHE/Plan (as appropriate) committee
to address particular issues.
(h) PHE shall include in the Medical Services Agreement and in all
Provider Agreements provisions consistent with and/or required
pursuant to this Agreement and applicable laws, rules and
regulations, including, without limitation, the following:
PORTIONS OF THIS EXHIBIT MARKED BY "*" HAVE BEEN OMITTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT. THE OMITTED PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.
19
i) specification of the circumstances under which such
Agreements may be terminated including procedures for
notice and effectuation of termination and opportunities,
if any, for cure;
ii) specification:
a) of the term of such Agreements;
b) that no PHE Provider may be terminated or
penalized solely because of filing a complaint or
appeal;
c) of the method of reimbursement, the right of the
Physician or Health Care Provider to receive a
periodic accounting (no less frequently than
annually) of funds held, to the extent that some
portion of compensation is tied to the occurrence
or non-occurrence of a pre-determined event, which
event shall be clearly specified, and the process
whereby a Provider may appeal a decision denying
additional compensation, in whole or in part, in
accordance with such compensation arrangement tied
to the occurrence or nonoccurrence of a pre-
determined event;
d) of the Covered Services to be provided;
e) that each PHE Provider shall hold each Covered
Person harmless for Covered Services, regardless
of such Provider's belief that his, her or its
compensation is made in accordance with the
reimbursement provision of the Provider Agreement
or is otherwise inadequate, except for applicable
Copayments, Coinsurance or Deductibles.
f) that PHE Providers shall not discriminate in their
treatment of Covered Persons;
g) that PHE Providers shall comply with the delegated
Quality Improvement and Utilization Management
functions;
h) that PHE Providers shall maintain licensure,
certification, and adequate malpractice coverage;
i) that patient information shall be kept
confidential; provided, however that subject to
-------- -------
applicable law, rules and regulations, the Plan,
PHE or Medical Group, as appropriate, shall have
the right to inspect a Covered Person's medical
records, as well as timely and appropriate
communication of patient information, in order
that the
20
Plan, PHE or Medical Group may perform their
respective duties efficiently and effectively for
the benefit of such Covered Person;
j) the process for an internal Provider complaint and
grievance procedure;
k) of any applicable Primary Care Physician,
Specialty Care Physician or Institutional Care
Facility requirements; and
l) [*********************************************
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iii) in the case of a Provider Agreement with a Physician, or
the Medical Services Agreement with the Medical Group,
acknowledgment by PHE or Medical Group (as appropriate)
and such Physician that upon the termination or expiration
of this Agreement, such agreement shall be deemed to and
shall be construed, at the option of PHE, as a continuing
agreement between PHE or Medical Group and such Physician.
iv) Plan is a third-party beneficiary of the Medical Services
Agreement and all Provider Agreements with respect to
Covered Persons.
3.7 Continuing Education. PHE shall cause the PHE Providers to participate
--------------------
in continuing education programs in accordance with standards set by
the Credentialing Criteria.
3.8 [************************************************************
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3.9 Hold Harmless.
-------------
PORTIONS OF THIS EXHIBIT MARKED BY "*" HAVE BEEN OMITTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT. THE OMITTED PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.
21
(a) PHE hereby agrees that in no event, including, but not limited to
non-payment by the Plan, the Plan's insolvency or breach of this
Agreement, shall PHE, [*****************************************
******************] to ▇▇▇▇, charge, collect a deposit from, seek
compensation, remuneration or reimbursement from, or have any
recourse against any Covered Person, or persons other than the
Plan or PHE acting on their behalf, for Covered Services provided
pursuant to this Agreement. This provision shall not prohibit
collection of fees for Non-Covered Services, Coinsurance,
Copayments, or Deductibles in accordance with the terms of the
Covered Person's Coverage Plan. PHE further agrees that (i) this
Section 3.9 shall survive the termination of this Agreement
regardless of the cause giving rise to termination and shall be
construed to be for the benefit of Covered Persons and (ii)
supersedes any oral or written contrary agreement now existing or
hereafter entered into between PHE and Medical Group, or between
Medical Group or PHE and a PHE Provider and a Covered Person, or
Persons acting on their behalf. Any modification, addition, or
deletion to the provisions of this Section 3.9 shall become
effective on a date no earlier than fifteen (15) days after the
Commissioner of Banking and Insurance has received written notice
of such proposed changes.
(b) [***************************************************************
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3.10 Covered Person's Responsibility for Non-Covered Services. It is
--------------------------------------------------------
recognized that a Covered Person may request health care services from
a Provider that are Non-Covered Services. In such cases, PHE shall
cause its PHE Providers to advise such Covered Person, prior to the
service or supply being provided, that the requested health care
services are not covered by the Coverage Plan and that he or she is
responsible for the full payment of such service or supply. If a
Covered Person and a Provider agree in writing to proceed with a Non-
Covered Service for which payment may be required, the Covered Person
may be billed for the service and a payment collected.
3.11 Collection of Charges from Covered Persons. PHE Providers shall be
------------------------------------------
responsible for the collection of applicable Coinsurance, Copayments
and Deductibles from Covered Persons upon the rendition of Covered
Services to Covered Persons pursuant to the Coverage Plan.
3.12 Continuity of Patient's Care. If a Covered Person's coverage under a
----------------------------
Coverage Plan is terminated while confined in an Institutional Care
Facility, PHE agrees to ensure that PHE Providers shall actively manage
the Covered Person's care through the earlier of
PORTIONS OF THIS EXHIBIT MARKED BY "*" HAVE BEEN OMITTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT. THE OMITTED PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.
22
discharge or transfer to another physician. If health care services are
provided to such person after discharge, PHE shall have the right to
seek compensation for the services provided from such person. PHE shall
assist in the transfer of such person's care to another Physician based
upon medical prudence and standards of practice.
3.13 Medical Records.
---------------
(a) Consistent with applicable law, rule and regulation, including
without limitation, patient confidentiality, a Covered Person's
medical records maintained by PHE or PHE Provider shall be made
available, without charge, to Providers treating the Covered
Person, to state and federal regulatory authorities,
Accreditation Agencies (if required), and to the Plan (including
to the Plan's Medical Director) and to their respective designees
(i) to determine that the content of such records meet the
standards and procedures established by the Plan; (ii) for peer
review, Quality Improvement, Utilization Management, risk
management, credentialing and complaint resolution purposes;
(iii) to collect clinical outcome data for programs such as HEDIS
and/or information required for research studies in which the
Plan is authorizing or participating in; (iv) to determine
compliance with federal and State, laws, rules, regulations
and/or to verify charges; (v) to audit compliance with
Accreditation Agency standards and requirements; and (vi) for any
legitimate business purpose related to the administration of a
Coverage Plan.
(b) PHE agrees to ensure that a medical record is established and
maintained in a uniform format for each Covered Person. This
record will be opened at the time of each Covered Person's first
visit and shall conform with applicable Plan and federal and
State laws, rules and regulations.
(c) PHE agrees to maintain or cause to be maintained such records
and, subject to applicable law, rule, regulation or regulatory
agency requirement, medical records shall be retained in a
legible format by PHE, Medical Group, Physicians and Health Care
Providers for at least ten (10) years or until the Covered Person
reaches the age of twenty-three (23) years old, whichever is
longer.
(d) PHE shall agree to, and shall cause PHE Providers to, maintain
and provide any other records the Plan may request for regulatory
compliance or program management purposes and shall cooperate
with the Plan in all fiscal and medical audits, site inspections,
peer review, utilization review and other monitoring required by
federal and state regulatory agencies and authorities and
Accreditation Agencies. Any record required by a federal or state
regulatory agency or authority or a Accreditation Agency shall,
at PHE's expense, be delivered to the Plan and/or such regulatory
agency or authority or Accreditation Agency within seven (7)
business days of its request, or such shorter period as may be
required by applicable law, rule, or regulation or such federal
or state regulatory agency or authority or Accreditation Agency.
23
(e) PHE shall cause PHE Providers to use their best efforts to
secure, at the time of patient encounter, the consent of a
Covered Person to the review or furnishing of his or her medical
records. In the event that PHE Providers do not secure such
written consent at the time of encounter, PHE agrees to use it's
best efforts to obtain any consent required from a Covered Person
to enable PHE to comply with this Section 3.13.
(f) PHE shall develop and follow, and cause PHE Providers to follow a
policy for the transfer of Covered Person medical records within
thirty (30) calendar days of the occurrence of one or more of the
following:
i) change of PHE Provider;
ii) such Covered Person is no longer a Covered Person; or
iii) other circumstances where requested by current or former
Covered Persons.
(g) Subject to Section 3.6(h)(ii), PHE shall, and shall cause PHE
Providers to, maintain any data or information pertaining to the
diagnosis, treatment, or health of any Covered Person obtained
from the Covered Person or any Provider in confidence. The data
or information shall not be disclosed to any person, except:
i) to the extent that it may be necessary under applicable
law, regulation, and rule;
ii) upon the express consent of the Covered Person;
iii) pursuant to state or court order for the production of
evidence or the discovery thereof; or
iv) in the event of a claim or litigation between such Covered
Person and PHE or such PHE Provider wherein such data or
information is pertinent.
(h) The obligations of PHE under this Section 3.14 shall survive
termination of this Agreement, and PHE shall ensure that PHE
Providers obligations hereunder, as reflected in the Medical
Services Agreement, or the Provider Agreement, as applicable,
shall survive termination of such agreements. Subject to
appropriate confidentiality requirements, and upon reasonable
notice, all records, electronic files, books, and papers of PHE
or PHE Providers pertaining to Covered Persons shall be open for
inspection by the Plan, authorized state and federal regulatory
agencies and authorities and Accreditation Agencies (to the
extent required) during normal business hours.
24
3.14 Maintenance and Access to Information.
-------------------------------------
(a) PHE shall, and shall cause PHE Providers to maintain, during the
term of this Agreement and for seven (7) years thereafter, such
records and information as reasonably deemed necessary by the
Plan to allow the Plan to properly administer its Coverage Plans,
including books and records to account for all financial
transactions pertaining to the delivery of Covered Services to
Covered Persons.
(b) PHE shall, and shall cause PHE Providers to provide access to the
Plan and its representatives and permit the Plan and its
representatives to copy all books, records, electronic files,
data, accounting systems, medical records and meeting minutes as
they relate to the provision of Covered Services delivered to
Covered Persons.
(c) PHE shall, and shall cause PHE Providers to comply with the
Plan's request for information as it relates to regulatory or
Accreditation Agency compliance, including, but not limited to,
the Medicaid and Medicare program reporting requirements. Quality
Improvement activities, complaint resolution, peer review,
Utilization Management, Physician and Health Care Provider
complaints, Credentialing, benefit determinations for Covered
Persons, coordination of benefits, subrogation, and claim
adjudication. PHE agrees, and shall cause PHE Providers to agree,
that such access will be timely and responsive to the Plan's
request therefor.
(d) Plan shall coordinate all requests for information through PHE
and shall not contact PHE Providers directly for such information
without PHE's prior written consent, except when required by law
or regulation or pursuant to a governmental audit.
3.15 Access to Facilities and Offices. PHE shall, and shall require PHE
--------------------------------
Providers to, permit the Plan, its designees, clients, potential
clients, regulators and representatives of Accreditation Agencies
access to the Health Care Centers and any office of PHE, or any PHE
Provider for review, inspection and evaluations incident to this
Agreement. Except when required by law or regulation, or pursuant to a
governmental audit, the Plan will give reasonable notice of the visits,
the purpose of the visit and identification of persons making the
visit. Any such visit shall be coordinated with PHE or the PHE
Provider, as applicable, so as to not unreasonably interfere with PHE
or the PHE Provider.
3.16 Listing of Providers; Hours of Operation
----------------------------------------
(a) PHE shall furnish the Plan with a list of all Physicians who are
PHE Providers. The list will include the name of each Physician;
the services available at the Center or office, the Physician's
usual hours of operation and location(s) or offices, daytime
telephone number and twenty-four (24) hour service telephone
number; and other information as may be required by the Plan.
Such information
25
shall also be provided with respect to other PHE Providers
designated from time to time by the Plan. This list may be used
by the Plan in marketing Coverage Plans. PHE will provide the
Plan with an updated list on a monthly basis.
(b) Each Health Care Center will have the hours of operation set
forth in Attachment 3.16. Any proposed changes in hours of
operation of Health Care Centers will be submitted to the Plan
for review and comment. In no case will hours of operation be
changed or decreased without adequate consultation with the Plan
as set forth in Attachment 3.16.
3.17 PHE Insurance.
-------------
(a) PHE, at PHE's sole cost and expense at all times during the term
of this Agreement, and all renewals hereof, shall have in full
force and effect:
i) a general comprehensive liability policy including
coverage for errors and omissions, and professional
liability coverage in amounts comparable to coverage
maintained by similar entities in the State for PHE, its
agents and employees. PHE agrees that such policies shall
not be canceled or amended unless written notice is given
by the carrier to the Plan and PHE at least thirty (30)
days prior to any cancellation or amendment;
ii) such policies of general liability, directors, officers,
and other insurance of the types and in the amounts as
required by the Plan to insure PHE, and its agents,
servants, and employees, acting within the scope of their
duties, against any claim or claims for damages arising by
reason of personal injury or death occasioned directly or
indirectly by PHE or its agents, servants or employees in
connection with the performance of PHE's responsibilities
hereunder, including with respect to Delegated Functions;
iii) workers' compensation insurance and any other coverage
required to meet minimum statutory requirements of the
State.
(b) PHE shall ensure that its Medical Services Agreement and its
Provider Agreement with PHE Providers include an obligation by
such PHE Providers to:
i) Maintain throughout the term of such agreements
professional liability insurance and general liability
insurance providing coverage in the minimum amounts of One
Million Dollars ($1,000,000.00) per occurrence and Three
Million Dollars ($3,000,000.00) combined single limits for
the PHE Provider;
ii) In the event the PHE Provider procures a "claims made"
policy as distinguished from an occurrence policy, procure
and maintain prior to
26
termination of such insurance, continuing "tail coverage"
in the same coverage amounts;
iii) Immediately notify PHE of any material changes in the PHE
Provider's insurance coverages; and
iv) Provide a certificate of such insurance coverage to PHE
upon PHE's request. PHE shall provide written notice to
the Plan within five (5) working days upon PHE's receipt
of notice of any cancellation and such insurance policy in
whole or in part. PHE shall obtain and present to Plan a
certificate of such insurance upon reasonable request by
the Plan.
(c) All the carriers, types of coverage, and limits referred to in
this Section 3.17 are subject to approval by the Plan, which
shall not be unreasonably withheld. PHE shall provide the Plan
annually with evidence of coverage, and shall give the Plan
immediate notice of any material changes in insurance coverage.
3.18 Accreditation. PHE shall, and shall cause PHE Providers to assist and
-------------
participate fully with the Plan in accreditation or certification
programs such as the NCQA and any other Accreditation Agency or
certification organizations designated by the Plan.
3.19 PHE Payments. The Plan shall pay PHE for all Covered Services based on
------------
the Capitation Payments; [*******************************************
********************************************************************
***********************************************************************
***] PHE agrees to accept such amounts as payment in full (other than
applicable Copayments, Coinsurance, or Deductibles which shall be
retained by PHE (subject to Attachment 1.1) for Covered Services
--------------
provided or arranged for Covered Persons.
(a) [**********************************************************
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***]
(b) Capitation payable to PHE shall be paid in two equal monthly
installments on the fifteenth (15th) and the thirtieth (30th) day
of each month. The first monthly installment shall be accompanied
by a complete enrollment register including, without limitation,
the following information for each Covered Person: Covered
Person's name, Covered Person's identification number, Covered
Person's address, date of birth, Primary Care Physician, coverage
date, coverage end date, Copayment amount, product identification
and group number, as well as details on any retroactive additions
and deletions. The portion of the Capitation Payment payable for
each Covered Person shall be prorated from the applicable
coverage date to the coverage end date. [*********************
***********************]
PORTIONS OF THIS EXHIBIT MARKED BY "*" HAVE BEEN OMITTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT. THE OMITTED PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.
27
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3.20 Coordination of Benefits. The parties shall cooperate, and PHE shall
------------------------
cause PHE Providers to cooperate, in the performance of coordination of
benefits. [****************************************************
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****************************************************************
********************************************************] If a Covered
Person who is treated by a PHE Provider is covered by health care
coverage provided by any Person other than the Plan, and if such other
Person is the primary carrier, PHE shall, and shall cause PHE Providers
to, cooperate with the Plan in all ▇▇▇▇▇▇▇▇ of such primary carrier on
behalf of the Covered Person for the Covered Services rendered by PHE
or PHE Providers, such ▇▇▇▇▇▇▇▇ to be at PHE Providers [*************
*** fee.] Furthermore, PHE shall, or shall cause PHE Providers to
execute any necessary document in connection with the submission of
such bills and claims by the Plan or the Covered Person.
3.21 Nondiscrimination in Patient Care. PHE shall not, nor shall it permit
---------------------------------
PHE Providers to discriminate against any Covered Person on the basis
of race, color, national origin, ancestry, religion, sex, marital
status, sexual orientation, age, health status, handicap, Plan
membership or source of payment including but not limited to Medicaid
or Medicare or frequency or cost of utilization of Covered Services.
PHE shall, and shall cause Medical Group, Physicians and Health Care
Providers to, render health care services to patients who are Covered
Persons in all lines of business in the same manner, in accordance with
the same standards, and subject to the same access to appointments and
services as are offered to its patients and which in any case shall
meet the requirements of Section 2.2 hereof.
3.22 Encounter Data. PHE agrees to provide encounter data for services
--------------
provided to Covered Persons. Such data shall be supplied in such manner
(including electronic transmission) as may be mutually agreed to by the
parties. The format shall be a HCFA 1500, as otherwise required by
regulation, or such other format as mutually agreed to by the parties.
3.23 Physician Incentive Plans.
-------------------------
(a) PHE shall not, nor shall it permit PHE Providers to establish any
Physician Incentive Plan with respect to Medicare or Medicaid
Coverage Plans which would
PORTIONS OF THIS EXHIBIT MARKED BY "*" HAVE BEEN OMITTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT. THE OMITTED PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.
28
result in a Physician being at Substantial Financial Risk without
first notifying the Plan at least sixty (60) days in advance of
the anticipated implementation thereof and obtaining the prior
approval of the Plan which shall not be unreasonably withheld.
Any such approval by the Plan shall be conditioned upon PHE's
procuring and maintaining, or causing its PHE Providers to
procure and maintain individual stop-loss protection on terms and
with coverage meeting applicable regulatory requirements.
(b) In order to assist the Plan in satisfying potential enrollee
survey, disclosure, stop-loss and reporting requirements under 42
C.F.R. (S)417.479, PHE shall, or shall cause PHE Providers to,
provide the Plan with sufficient and appropriate information as
to any Physician Incentive Plan between PHE and PHE Providers or
between either of them and the Physicians that bases compensation
on the use or cost of services not rendered by Physicians to
Covered Persons who are Medicare beneficiaries or Medicaid
recipients.
(c) PHE shall not, nor shall it permit PHE Providers to, enter into
any contract or arrangement providing for the assumption of
Financial Risk except in compliance with the provisions of
N.J.A.C. 8:38-15.1. PHE further agrees to provide to the Plan any
--------
information necessary for the Plan to demonstrate to regulators
and/or Accreditation Agencies that the Provider Agreements are in
compliance with N.J.A.C. 8:38-15.1.
--------
(d) PHE shall, and shall cause PHE Providers to, provide the
information described in Sections 3.23(b) and (c) to the Plan
within fifteen (15) days of a request by the Plan. In addition,
PHE shall, and shall cause PHE Providers to, notify the Plan
within fifteen (15) days before implementing any changes to any
Physician Incentive Plan.
(e) PHE acknowledges, and shall cause PHE Providers to so
acknowledge, that the Plan may subsequently disclose information
about a Physician Incentive Plan of PHE Providers to the Health
Care Financing Administration as required under 42 C.F.R.
(S)417.479 or to State regulators as required under N.J.A.C.
--------
8:38-15.1 and N.J.A.C. 8:38-13.4 and releases and, as
--------
appropriate, shall cause Medical Group to release, the Plan from
any claims that PHE or PHE Providers may have against the Plan as
a result of such subsequent disclosures. Notwithstanding the
above, the Plan shall release only the minimum required to be in
compliance with state and federal law in this regard.
(f) No compensation under this Agreement, whether direct or indirect,
nor any other provision of this Agreement shall be construed as
the Plan inducing PHE to reduce or limit health care services to
Covered Persons.
29
(g) In the event there is a change in state or federal law or
regulations regarding Physician Incentive Plans [************
**************] this Section 3.23 shall be modified to reflect
such change.
3.24 [*******************************************************************
******************************************************************
******************************************************************
***********************************************************************
***********************************************************************
***********************************************************************
***********************************************************************
**************]
3.25 Physician Grievances. PHE shall establish a PHE Provider grievance
--------------------
procedure in accordance with requirements established by the Plan. No
PHE Provider shall be terminated or penalized solely because of filing
any complaint or appeal.
3.26 Claims Processing. [**********************************************
-----------------
*********************************************************************
*******************************************************] PHE shall
adjudicate all Provider claims for all Covered Services in accordance
with its policies and procedures, subject to approval by the Plan,
which shall not be unreasonably withheld. PHE shall provide to the Plan
claims payment reports reasonably satisfactory to the Plan including
those claims paid for ASO and POS products. PHE shall perform claims
processing in accordance with the applicable standards set forth in
Attachment 5.5.
--------------
3.27 Financial Net Worth. PHE shall be responsible at all times to have
-------------------
sufficient funds to perform its financial responsibilities under this
Agreement related to payment of claims. PHE shall report to the Plan on
its fiscal soundness and fiscal solvency [*****************************
***************************************************************
***************************************************************
*********************************************************************
***********************************************************************
*********************************************************************
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*********************************************************************
*********************************************************************
*********************************************************************
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*********************************************************************
*********************************************************************
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********************]
PORTIONS OF THIS EXHIBIT MARKED BY "*" HAVE BEEN OMITTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT. THE OMITTED PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.
30
3.28 Right to Audit Claims.
---------------------
(a) The Plan shall have the right to audit the accuracy of claims
[**********] Such audit shall be conducted in accordance with the
standards established by the Plan and as otherwise required by
federal and State regulators and/or Accreditation Agencies [***
*****************************************************************
**************************************************************
*****************************************] Such audit shall be
during normal business hours of PHE. [***************************
**************************************************************
**************************************************************]
The Plan, at its own cost, may engage a third party to conduct
such audit on its behalf, provided that such third party agrees
in writing to the limitations on right to audit set forth in
Subsection (b) below.
(b) With respect to any audit of PHE's information and records
pursuant to this section, the Plan agrees that (i) the
information and records will be kept confidential, provided that
-------------
the Plan's disclosure of such information to governmental
regulators and Accreditation Agencies to the extent required
shall not constitute a violation of this confidentiality
obligation; (ii) the Plan shall comply with all federal, state,
and local laws regarding the confidentiality of health care
information; and (iii) no original record (or copies thereof) may
be removed from the site where the auditors locate such
information except as required by any governmental regulators and
Accreditation Agencies, in which case the Plan shall be permitted
to make copies of documents necessary to comply with such
regulators and/or Accreditation Agencies disclosure requirements.
(c) The Plan shall bear all of its costs of such audit.
3.29 [**************************************************************
***********************************************************************
***********************************************************************
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*******************************]
SECTION 3A [*******************************]
[*******************************************************************************
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*********************************]
PORTIONS OF THIS EXHIBIT MARKED BY "*" HAVE BEEN OMITTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT. THE OMITTED PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.
31
[**********************************************************************
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[***************************************************************
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********]
[**********************************************************************
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******]
[**********************************************************************
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[*******************************************************************
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[*********************************************************************
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[****************************************]
[****************************************************************
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*********************************************************
PORTIONS OF THIS EXHIBIT MARKED BY "*" HAVE BEEN OMITTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT. THE OMITTED PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.
32
[***********************************************************
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****************]
[********************************************************
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[*****************************************************************************
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*********]
[******************************************************************************
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*********]
SECTION 4 - RESPONSIBILITIES AND OBLIGATIONS OF THE PLAN
PORTIONS OF THIS EXHIBIT MARKED BY "*" HAVE BEEN OMITTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT. THE OMITTED PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.
33
4.1 [***************************************************************
******************************************************************
***********************************************************************
****************************]
4.2 Administrative Operations
-------------------------
(a) Except for Delegated Functions which are the subject of the
Delegation Agreement, and as otherwise set forth in this
Agreement, the Plan, either directly or through its Affiliates,
shall conduct the day-to-day administrative operations of the
Coverage Plans, including but not limited to: setting premiums
and pricing; establishing the Coverage Plans; processing
enrollment applications; determining Covered Person eligibility;
providing Covered Person education and services regarding plan
administration; performing accounting; billing employers and
subscribers; collecting premiums; managing regulatory and
Accreditation Agency compliance and reporting for Coverage Plans;
administering Covered Person grievances and appeals; marketing
for Coverage Plans; and any other functions that are necessary
and appropriate for the proper administrative and support of the
arrangement for Covered Services to be provided for Covered
Persons.
(b) The Plan agrees that in adopting any changes to the scope of
Covered Services provided under a Coverage Plan, any changes in
benefit structure, including Copayments, Coinsurance and
Deductibles, or other structural changes to Coverage Plans, [**
****************************************************************
****************************************************************
****************************************************************
****************************************************************
****************************************************************
****************************************************************
****************************************************************
****************************************************************
****************************************************************
****************************************************************
****************************************************************
****************************************************************
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****************************************************************
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**************]
(c) [************************************************************
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**************************************************************
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**************************************************************
**************************************************************
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**************************************************************
************]
PORTIONS OF THIS EXHIBIT MARKED BY "*" HAVE BEEN OMITTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT. THE OMITTED PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.
34
[**********************************************************
**************************************************************
**************************************************************
**************************************************************
**************************************************************
**************************************************************
**********************************************************]
4.3 Covered Person Identification and Eligibility. The Plan, either
---------------------------------------------
directly or through its Affiliates, shall maintain a system of Covered
Person identification, including Covered Person identification cards
and eligibility information, to enable PHE and its Affiliates to
confirm a Covered Person's eligibility for Covered Services. The
identification cards shall include PHE's telephone number. Further, on
a monthly basis, Plan shall provide PHE a list of Covered Persons
during the following month and any other eligibility data required by
PHE in electronic form to discharge its duties hereunder.
4.4 Listing of Physicians and Health Care Providers. The Plan, either
-----------------------------------------------
directly or through its Affiliates, shall make available and provide to
Covered Persons and to PHE a current listing of Physicians and Health
Care Providers who shall provide Covered Services to Covered Persons as
described in this Agreement.
4.5 Delegated Functions
-------------------
(a) The Plan, in consultation with PHE, shall establish the terms,
policies, procedures and systems for its Quality Improvement,
Risk Management, and Utilization Management, and credentialing
programs. PHE shall administer the Plan's programs and the Plan
shall provide PHE with copies of the applicable Plan's Quality
Improvement Utilization Management, Credentialing, peer review,
and complaint resolution programs, and the Provider Guide. Plan
shall also provide PHE with advanced written notice of proposed
changes to the Plan's programs identified herein, and to its
Policies and Procedures, including the Provider Guide.
(b) The Plan has reviewed and hereby approves PHE's policies and
procedures regarding the Delegated Functions as being consistent
with the policies and procedures adopted by the Plan. The Plan
hereby delegates to PHE the responsibility of conducting the
Delegated Functions on the Plan's behalf to ensure that each PHE
Provider (and their respective employees, if any) shall (i)
comply with all applicable federal and State laws, rules and
regulations and (ii) accept and abide by all policies and
procedures of PHE in accordance with the provisions of the
Delegation Agreement.
4.6 Payment Transmission. The Plan shall make payments to PHE of Capitation
--------------------
Payments or other payments required to be made by the Plan to PHE, in
accordance with the terms and conditions of this Agreement and
Attachment 1.1.
--------------
PORTIONS OF THIS EXHIBIT MARKED BY "*" HAVE BEEN OMITTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT. THE OMITTED PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.
35
4.7 Sales and Marketing
-------------------
(a) The Plan will be responsible for the development, pricing,
distribution, marketing, advertising and sale of all health
coverage products, subject to Section 4.2(b) above. From time to
time the Plan may require PHE and/or PHE Providers, and PHE
agrees to, and shall cause PHE Providers to agree, to participate
in employer, regulatory and Accreditation Agency presentations
and meetings as part of the sales process.
(b) PHE shall, as reasonably requested by the Plan, use the Plan's
name and service marks [**************************************]
on its stationery, business cards and other similar literature.
Samples of such proposed uses shall be submitted to the Plan for
its prior approval. PHE may not nor shall it permit any PHE
Provider to use the Plan's name, nor the names of any of its
Affiliates, nor any of their service marks, in any other manner
or for any other purpose without the prior written consent of the
Plan. [**********************************************************
***********************************************************
***********************************************************
***********************************************************
***********************************************************
***]
(c) The Plan may use the name of PHE and PHE Providers and other
relevant information (including, but not limited to, address,
telephone numbers, and hours of operation and/or office hours) in
its marketing materials, provider directories, and other
materials mutually agreed to.
(d) The Plan agrees to use its best efforts to market in order to
increase Plan membership.
4.8 Plan Insurance. Plan shall at all times maintain all insurance typical
--------------
of similar health plans. In addition, it shall provide tail coverage
for all employed Physicians who practice at Health Care Centers with
respect to Covered Services rendered to Covered Persons prior to the
Effective Date, unless the Plan required such Physicians to maintain
appropriate tail coverage, and the Plan has provided PHE with the
relevant certificates of insurance coverage.
4.9 [****************************************************************
*******************************************************************
*******************************************************************
*******************************************************************
*******************************************************************
*******************************************************************
*******************************************************************
******]
PORTIONS OF THIS EXHIBIT MARKED BY "*" HAVE BEEN OMITTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT. THE OMITTED PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.
36
4.10 Product Information. On or before the Effective Date of this Agreement,
-------------------
Plan shall furnish PHE with copies of Plan's model contracts,
subscriber agreements, Evidences of Coverage approved by the State, and
special arrangements with large employers, special intercompany
agreements for coverage of large groups, and other special arrangements
of the Plan.
4.11 Performance Standards of Plan. Plan agrees to meet the performance
-----------------------------
standards set forth in Attachment 4.11, as such standards may be
---------------
amended from time to time upon mutual written consent of the parties.
The parties shall agree upon the timing, measurement tools, authority
to measure, performance scales, and notice and cure periods applicable
to all performance standards required of the Plan. [******************
***********************************************************************
***********************************************************************
***********************************************************************
***********************************************************************
***********************************************************************
***********************************************************************
***********************************************************************
***********************************************************************
***********************************************************************
***********************************************************************
***********************************************************************
***********************************************************************
***********************************************************************
**************]
4.12 Plan Reporting. For so long as Plan has any responsibilities with
--------------
respect to claims processing for Covered Services to Covered Persons [*
********************************] the Plan shall provide PHE with such
reports and information on Covered Persons, including but not limited
to, detailed documentation on claims paid and other encounter data, as
may reasonably be requested by PHE and agreed to by the Plan. The
claims payable report shall supply sufficient data elements to provide
eligibility data regarding Covered Persons, summary claims activity,
patient identification, provider identification, place of service,
primary diagnoses, primary procedure codes, amounts charged (except
when under a capitation arrangement), amounts covered, amounts paid,
and authorization codes when applicable. [***************************
***********************************************************************
*************************************]
4.13 [********************************************************************
***********************************************************************
***********************************************************************
***********************************************************************
***********************************************************************
***********************************************************************
***********************************************************************
***********************************************************************
***********************************************************************
***********************************************************************
***********************************************************************
****************]
PORTIONS OF THIS EXHIBIT MARKED BY "*" HAVE BEEN OMITTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT. THE OMITTED PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.
37
[**********************************************************************
***********************************************************************
***********************************************************************
***********************************************************************
***********************************************************************
*******************************]
4.14 Plan Financial Net Worth. The Plan shall be responsible at all times to
------------------------
have sufficient funds to perform its financial responsibilities under
this Agreement. Upon reasonable request by PHE, the Plan shall report
to PHE on its fiscal soundness and financial solvency by providing
annual audited financial statements and quarterly unaudited financial
statements.
SECTION 5 - OTHER PROVISIONS
5.1 Cooperation and Coordination.
----------------------------
(a) The Plan and PHE acknowledge and agree that it is in their best
interests and the best interest of Covered Persons for the Plan
and PHE to consult and coordinate the delivery of Covered
Services and the implementation of the provisions of this
Agreement. Accordingly, each of the Plan and PHE agree to appoint
a senior executive who shall meet on a regular basis to discuss
and resolve such issues as they shall determine consistent with
the foregoing. In addition, at the request of the Plan, PHE shall
appoint additional persons, including representatives from PHE
Providers to serve as ex-officio members of committees
established by the Plan with respect to Credentialing, Quality
Improvement, Risk Management, Utilization Management, peer review
and other similar matters.
(b) PHE further agrees, at the reasonable request of the Plan, to
assist the Plan in other matters of mutual interest, including,
but not limited to, attendance at meetings with governmental
authorities and Accreditation Agencies and participation in
hearings of legislative bodies regulatory agencies.
(c) PHE further agrees, at the reasonable request of the Plan, to
assist the Plan in the development of responses to requests for
proposals from employer associations and governmental programs
including, without limitation, Medicaid or Medicare.
5.2 Amendment of Certificate of Authority. PHE agrees not to, nor shall it
-------------------------------------
permit PHE Providers to take any action or fail to take any action
which, under applicable law, rules or regulations, would jeopardize the
Plan's federal qualification or require the Plan to obtain an amendment
to its certificate of authority without, in each instance, seeking the
prior written approval of the Plan, which may be withheld in its sole
discretion.
PORTIONS OF THIS EXHIBIT MARKED BY "*" HAVE BEEN OMITTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT. THE OMITTED PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.
38
5.3 Indemnification
---------------
[**************************************************************
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[************************************************************
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[******************************************************************
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[*********************************************************************
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[***************************************************************
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**************************************************]
PORTIONS OF THIS EXHIBIT MARKED BY "*" HAVE BEEN OMITTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT. THE OMITTED PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.
39
[****************************************************************
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**********]
5.4 Effective Date of Coverage for Covered Persons. For the purpose of
----------------------------------------------
Capitation Payments to PHE under this Agreement, and for this purpose
only, the effective date of coverage for a Covered Person shall be
deemed to be the first day of the month in which the Covered Person is
enrolled in a Coverage Plan, if the Covered Person enrolls in a
Coverage Plan within the first fifteen (15) days of a month and shall
be the first day of the month following the month in which the Covered
Person is enrolled in a Coverage
PORTIONS OF THIS EXHIBIT MARKED BY "*" HAVE BEEN OMITTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT. THE OMITTED PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.
40
Plan, if the Covered Person enrolls in a Coverage Plan after the first
fifteen days of a month.
5.5 Claims Processing.
-----------------
(a) General - To the extent that either the Plan and/or PHE or its
respective subcontractor is designated to perform claims
processing services ("CP Administrator") such party shall meet
the claims processing standards set forth in Attachment 5.5.
--------------
(b) Obligations To Pay Claims - The obligation of the CP
Administrator to pay claims submitted for Covered Persons for
Covered Services shall be limited to claims that have been
submitted in accordance with the time period for coverage of
claims of the respective Coverage Plan. [***********************
*************************************************************
****************************************************************
***************************************************************
***************************************************] The CP
Administrator shall be obligated to process only claims submitted
in accordance with HCFA Form 1500 (for Physician claims) or
UB-92- (for Institutional Facility claims) and if such claims are
submitted in accordance with the claims submission methods
approved by the Plan.
(c) Reporting
i) Within [*********** days] of receiving a reasonable
request from either party, the CP Administrator shall
provide claims payment reports organized either by
Covered Person or by Provider which contains sufficient
detail to allow the requesting party to determine (a)
whether each patient was a Covered Person on the date of
each service; (b) the benefits available to each Covered
Person; (c) the amounts charged, covered, and payable for
each service; and (d) whether each service was pre-
approved by the Utilization Management program.
ii) [************************************************
********************************************************
********************************************************
********************************************************
********************************************************
********************************************************
********************************************************
**********************************************]
iii) By the [*********************] the CP Administrator shall
provide to the parties an Electronic Claims Payable Report
in the format set forth in Attachment 5.5.
--------------
PORTIONS OF THIS EXHIBIT MARKED BY "*" HAVE BEEN OMITTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT. THE OMITTED PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.
41
(d) Final Authority - The Plan shall have final authority to
adjudicate disputes over denied claims by Covered Persons and PHE
shall have such authority for claims submitted by Providers.
(e) The CP Administrator shall have no responsibility to indemnify
either party for erroneously paid claims attributed as Covered
Services on behalf of Covered Persons.
SECTION 6 - TERM AND TERMINATION
6.1 Duration of Agreement and Renewal. The initial term of this Agreement
---------------------------------
shall be for twenty (20) years commencing on the Effective Date. This
Agreement shall thereafter automatically be renewed for successive five
(5) year periods unless either party gives written notice of non-
renewal to the other party at least one hundred and twenty (120) days
prior to the annual renewal date, or unless this Agreement is
terminated pursuant to the terms of this Section 6.
6.2 Mutual Consent. This Agreement may be terminated at any time upon the
--------------
mutual written consent of both parties.
6.3 Termination Without Cause. Prior to December 31, 2000, neither party
-------------------------
may terminate this Agreement without cause. After December 31, 2000,
either party may terminate this Agreement without cause on ninety (90)
days' prior written notice; [****************************************
*********************************************************************
********************************]
[*******************************************************************
****************************************************************
************************]
[*******************************************************************
*********************************************************]
6.4 Termination for Cause. Either party may terminate this Agreement after
---------------------
a material breach, on the grounds set forth in this Section 6.4, by
providing to the breaching party at least sixty (60) days' prior
written notice of its intent to terminate this Agreement unless a
shorter time period is required pursuant to the provisions of
subparagraphs 3 and 5 of the definition of "material breach" set forth
below. Such notice shall be accompanied by a statement setting forth
the grounds for any alleged material breach of this Agreement. Such
termination shall be effective no less than sixty (60) days after the
date on which notice of the material breach is received by the
breaching party. Notwithstanding, the foregoing, in no event shall this
Agreement be terminated pursuant to Section 6.4 if:
(a) the material breach has been cured within such sixty (60) day
period or other period determined by the parties, to the
reasonable satisfaction of the non-breaching party;
PORTIONS OF THIS EXHIBIT MARKED BY "*" HAVE BEEN OMITTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT. THE OMITTED PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.
42
(b) in the case of a material breach that can be cured, but cannot be
cured within such sixty (60) days period, the breaching party has
instituted corrective action within such sixty (60) day period
and diligently implements such corrective action until the
material breach is cured to the reasonable satisfaction of the
non-breaching party.
The term "material breach" includes the following:
1. Plan interferes with PHE's business arrangements
with other Managed Care Organizations in violation of
Section 3.5(c);
2. [*********************************************
***************************************************
*******************************************************
**************************************]
3. Where Plan receives notice of the impending
suspension or revocation of its Certificate of Authority
from the State or receives notice of threatened
termination of its federal qualification as an HMO from
the U.S. Health Care Financing Administration, and such
notice cites the Plan's failure to comply with duties or
responsibilities for which PHE is contractually
responsible and for which PHE has (i) received prior
notice from the Plan of pending federal or state
regulatory action and (ii) has failed to cure such
compliance duties or responsibilities within the time
period provided despite reasonably sufficient time to
cure;
4. PHE is in breach of Section 3.5(d); or
5. Where the Plan receives notice of termination
from the (i) State employees health benefits plan; (ii)
the Federal Employees Health Benefits Plan; (iii) the
State Medicaid program or (iv) the Federal Medicare
program (collectively "Special Payors") and such notice
from such Special Payor cites the failure of the Plan to
comply with duties or responsibilities for which PHE is
contractually responsible and for which PHE has received
reasonable advance notice of its noncompliance with the
applicable Special Payor's requirements, and PHE failed
to cure such violation within the stated cure period
despite sufficient notice from the Plan.
The rights and remedies of the parties upon termination with cause
under this Agreement are set forth in Attachment 6.3, in addition to
--------------
all other rights and remedies available at law or in equity.
PORTIONS OF THIS EXHIBIT MARKED BY "*" HAVE BEEN OMITTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT. THE OMITTED PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.
43
6.5 Immediate Termination. Either party may terminate this Agreement
---------------------
immediately upon the following:
(a) a party files a petition in or for bankruptcy, reorganization or
an arrangement with creditors; make a general assignment for the
benefit of creditors; be adjudged bankrupt; be unable to pay
debts as they become due; have a trustee, receiver or other
custodian appointed on its behalf; or should any other case or
proceeding under any bankruptcy or insolvency law, or any
dissolution or liquidation proceeding be commenced against it,
which case or proceeding is not dismissed within sixty (60) days
of filing;
(b) [***************************************************************
*********]
(c) [***************************************************************
********************************************************]
6.6 Danger to Health or Safety of Covered Persons. The Plan may require
---------------------------------------------
that PHE cause the termination of any PHE Provider from participation
in this Agreement immediately, upon written notice to PHE, whenever it
or any State or federal regulatory agency reasonably believes that the
health or safety of Covered Persons is endangered by actions of such
PHE Provider. The Plan shall provide indemnification protections to PHE
as set forth in Section 5.3(a) of this Agreement related to the Plan's
determination and belief that the health or safety of Covered Persons
is endangered, as provided in this Section 6.6.
6.7 Continuation of Services. Any termination or non-renewal of this
------------------------
Agreement shall not release PHE from fulfilling its obligations
hereunder including, at the Plan's request, in the Plan's sole
discretion, arranging for the provision of Covered Services for the
benefit of Covered Persons until such time as, in the Plan's sole
judgment, an orderly transfer of Covered Persons to other physicians
and health care providers has been effected; [**********************
*******************************************************************
**************************************] Unless otherwise provided by
State or Federal law (i.e., Medicare/Medicaid), the Plan shall make
Capitation Payments to PHE as compensation for such services rendered
pursuant to this Section, as set forth in Attachment 1.1.
--------------
6.8 Non-Solicitation of Covered Persons
-----------------------------------
(a) [**************************************************************
**************************************************************
**************************************************************
**************************************************************
**************************************************************
**************************************************************
**************************************************************
*************************]
PORTIONS OF THIS EXHIBIT MARKED BY "*" HAVE BEEN OMITTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT. THE OMITTED PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.
44
(b) At any time during this Agreement, and for a period of [******]
following the termination of this Agreement, [**************
*****************************************************************
*************************] PHE agrees that it and its Affiliates
shall not, and shall require PHE Providers to agree that they
will not:
i) [********************************************************
**********************************************************
**********************************************************
**********************************************************
**********************************************************
**********************************************************
**********************]
ii) [********************************************************
*********************************] or
iii) solicit Covered Persons or groups to become enrolled with
any Managed Care Organization [*******************
***************************************************
**************]
(c) [**********************************************************
*****************************************************************
*****************************************************************
*****************************************************************
*****************************************************************
***********************************************]
(d) Notwithstanding the above, nothing in this Section 6.8 shall be
interpreted to restrict Providers in any way from discussing with
Covered Persons any aspects of the Provider's rendering of
Covered Services to such Covered Persons.
(e) [**********************************************************
**************************************]
6.9 Right to Transfer Covered Persons. In addition to any other rights
---------------------------------
granted to the Plan hereunder, as of the effective date of termination
of this Agreement, pursuant to Sections 6.3(b), 6.4 or 6.5 or
termination of a PHE Provider from participation under this Agreement,
the Plan, subject to applicable laws, rules and regulations, may
immediately transfer Covered Persons to Plan Providers or other PHE
Providers, as appropriate.
6.10 Remedies. The parties acknowledges that it may be impossible to measure
--------
in money the damages to the other party if the breaching party fails to
comply with any of the restrictions or obligations contained in this
Agreement. If the non-breaching party determines that it does not have
an adequate remedy at law and determines to pursue
PORTIONS OF THIS EXHIBIT MARKED BY "*" HAVE BEEN OMITTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT. THE OMITTED PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.
45
relief in equity, then the breaching party agrees that, in addition to
any other rights or remedies which the non-breaching party may have,
the non-breaching party shall be entitled to immediate injunctive
relief to enforce its restrictions or obligations without the necessity
of posting a bond. In any action or proceeding brought in equity to
enforce the provisions of this Agreement, the court shall have the
power to render an award directing the breaching party to specifically
perform in accordance with the provisions of this Agreement. If any
restriction is held to be unenforceable because of the scope or
duration of such provision or the geographic area covered thereby, the
parties agree that the court making such determination shall have the
power to reduce or limit the scope or duration or geographic area of
such provision and, in its reduced form, said provision shall be fully
enforceable as if set forth herein. All rights and remedies provided
under this Agreement are cumulative and not alternative.
6.11 Dispute Resolution. If any dispute, controversy, or claim arises out
------------------
of, or is related to this Agreement, or the breach thereof, except with
respect to any matter covered under Sections 6.4 or 6.5, the parties
shall first make their best efforts to resolve such dispute,
controversy, or claim informally. If it cannot be resolved informally,
the dispute, controversy, or claim shall be settled by arbitration by
each selecting one (1) arbitrator from the list provided by the
National Health Lawyers Association ("NHLA") Dispute Resolution
----
Service. The two (2) arbitrators shall then select a fair and impartial
third person from the list of arbitrators provided by the NHLA Dispute
Resolution Service to complete a panel of three (3) arbitrators (the
"Panel"). Each of the parties agree that the Panel shall conduct
-----
itself, and the arbitration proceedings, in accordance with the NHLA
Alternative Dispute Resolution Service Rules of Procedure for
Arbitration. Arbitration costs shall be borne equally by the parties;
each party shall bear the costs of its own counsel and technical or
consulting support in connection with the arbitration. Upon occurrence
of any of the following events, which are expressly subject to this
Section 6.11, either party may demand and be subject to arbitration as
set forth herein:
(a) Should either party undergo any material changes to the
organizational structure or composition of the party or its
Affiliates, including but not limited to a sale of assets,
merger, consolidation, or any transaction that would materially
affect the terms and conditions of this Agreement or would
otherwise materially alter the management of the business affairs
of the party; or
(b) Should there be an adverse change in the law such that, in the
opinion of the Plan's or PHE's legal counsel, materially and
adversely affects the legality of this Agreement or the ability
of that party to perform its obligations or receive the benefits
intended under this Agreement, or
(c) Unless otherwise required by state and federal law, where the
Plan, in consultation with the appropriate state or federal
regulatory entity having jurisdiction, determines that the number
of PHE Providers is not sufficient to meet the needs of Covered
Persons with respect to the availability, accessibility, or
continuity of
46
care necessary and such insufficiency has remained uncured for a
period of forty-five (45) days following receipt of notice by the
Plan declaring same.
SECTION 7 - GENERAL PROVISIONS
7.1 Entire Agreement; Modification.
------------------------------
(a) This Agreement, its Exhibits and its Attachments (incorporated
herein by reference), and any other documents incorporated by
reference, constitute the entire understanding of the parties
hereto and supersede any and all prior written or oral agreements,
representations, or understandings.
(b) Except as otherwise set forth herein, no modifications, discharges,
amendments, or alterations to this Agreement shall be effective
unless signed by both parties. Furthermore, neither this Agreement
nor any modifications, discharges, amendments or alterations hereof
shall be considered executed by, or binding upon, either party
unless and until signed by officers of PHE and the Plan.
(c) Minor or immaterial revisions by the Plan from time to time of its
Policies and Procedures, including its Credentialing, Quality
Improvement, Risk Management, Utilization Management, peer review
and complaint resolution programs, the terms and conditions of the
Provider Guide or the Coverage Plans, or any other right reserved
to the Plan hereunder, shall not constitute a modification,
amendment, or alteration to this Agreement which require the
execution of a formal amendment to this Agreement signed by both
parties. [*********************************************************
**********************************************************]
(d) The Plan or PHE may amend this Agreement, by providing thirty (30)
days' prior written notice to the other party, in order to maintain
compliance with applicable federal and/or state law, rules or
regulations. Such amendment shall be binding .
7.2 Invalid Provisions. It is understood that any provision of this Agreement
------------------
which is determined to be in violation of any state or federal law, rule
or regulation shall be null and void and that any such determination
shall not affect the validity or enforceability of any of the other
provisions of this Agreement.
7.3 Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the State of New Jersey without giving effect
to the principles of conflicts of law.
7.4 Compliance with Law. At all times during the term of this Agreement and
-------------------
during any period when PHE is providing continuation services, PHE and
the Plan each agree that it shall, and PHE shall cause PHE Providers to
comply with all applicable requirements of municipal, county, state and
federal authorities, all applicable municipal and county
PORTIONS OF THIS EXHIBIT MARKED BY "*" HAVE BEEN OMITTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT. THE OMITTED PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.
47
ordinances and regulations; and all applicable state and federal statutes
and regulations now or hereafter in force and effect to the extent that
they bear upon the subject matter of this Agreement. These include,
without limitation of the foregoing, applicable requirements under any
confidentiality laws, privacy laws, fair employment practices or similar
laws declaring discrimination in employment based upon race, color,
creed, religion, sex, sexual preference, disabilities (including the
Americans with Disabilities Act) or national origin as illegal and, if
applicable, Title VII of the Civil Rights Act of 1964 or any applicable
rule or regulation promulgated pursuant to any such laws described above.
Each party shall be responsible for the payment of all applicable
federal, state and local taxes relating to its business.
7.5 No Waiver. No responsibility, condition, or undertaking contained in this
---------
Agreement may be waived except by the written agreement of the parties.
Forbearance or indulgence in any other form by either party in regard to
any responsibility, condition, or undertaking to be kept or performed by
the other party shall not constitute a waiver thereof, and until complete
satisfaction or performance of all such responsibilities, conditions, and
undertakings have been satisfied, the other party shall be entitled to
invoke any remedy available under this Agreement, despite any such
forbearance or indulgence.
7.6 Notice. All notices, requests, demands and other communications which are
------
required or may be given under this Agreement shall be in writing and
shall be deemed to have been duly given when received if personally
delivered; when transmitted if transmitted by facsimile; the day after
being sent, if sent for next day delivery by a recognized overnight
delivery service as verified (e.g., Federal Express); and upon receipt,
if sent by certified or registered mail, return receipt requested. In
each case notice shall be given as follows:
If to the Plan, addressed to: HIP Health Plan of New Jersey
▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, President
with a copy to: ▇▇▇▇▇▇▇▇▇ ▇. Title, Vice President
and General Counsel
HIP Health Plan of New Jersey
▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
If to PHE, addressed to: Pinnacle Health Enterprises, L.L.C.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
48
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇, M.D.
President
and PHP Healthcare Corporation
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Senior Vice President and Counsel
7.7 Confidentiality
---------------
(a) The Plan and PHE each acknowledge a duty to maintain the
confidentiality of the relationship and arrangements between them,
including but not limited to the payment terms of this Agreement.
Both parties shall make no disclosure of the terms of their
relationship beyond that contained in a mutually agreed written
summary and shall not release all or any part of this Agreement to
any Person without the prior written consent of the parties.
(b) Both parties agree that confidential information furnished to each
other in performance of this Agreement will not be discussed with
third parties without the written consent of the other party. Both
parties agree that unless otherwise indicated, information
disclosed shall be deemed confidential and each party will be
responsible for any breach of this provision by Affiliates,
advisors, contractors and employees.
(c) [******************************************************************
*******************************************************************
*******************************************************************
******************************************************************
*******************************************************************
****]
7.8 Ownership of Records. The parties acknowledge and agree that the business
--------------------
records of each party, including but not limited to those related to
Covered Person eligibility, benefits, polices and procedures, manuals,
and Coverage Plans and Covered Services shall remain the property of such
party.
7.9 [**********************************************************************
***********************************************************************
*******************************************************************
**********}
7.10 [************************************************************************
*********************************************************************
************************]
PORTIONS OF THIS EXHIBIT MARKED BY "*" HAVE BEEN OMITTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT. THE OMITTED PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.
49
7.11 Duplicate Originals. This Agreement may be executed in two counterparts,
-------------------
each of which shall be deemed an original; however, all shall constitute
one and the same Agreement.
7.12 Headings. The Section headings used herein are for reference and
--------
convenience only and shall not enter into the interpretation hereof. Any
attachments, exhibits, tables or schedules referred to herein and/or
attached or to be attached hereto are incorporated herein to the same
extent as if set forth in full herein.
7.13 Assignment.
----------
(a) This Agreement, and the right to receive payment hereunder, may not
be assigned by PHE without the prior written consent of the Plan.
Any attempt by PHE to assign this Agreement without the prior
written consent of the Plan shall void the attempted assignment.
(b) This Agreement may not be assigned by Plan without the prior
written consent of PHE.
(c) All provisions hereof shall be binding upon, inure to the benefit
of, and be enforceable by and against the respective successors and
permitted assigns of the parties hereto.
7.14 Force Majeure. Neither party shall be liable for an inability to meet its
-------------
obligations under this Agreement by "Force Majeure". "Force Majeure"
-------------
means any cause beyond the control of a party, including but not limited
to an act of God, act or omission of civil or military authorities of a
state or nation, fire, strike, flood, riot, war, delay of transportation,
or inability due to any of these causes to obtain necessary labor,
materials or facilities; provided, however, that the lack of financial
-------- -------
resources or the failure to maintain policies of insurance shall never be
excused.
7.15 Construction of Agreement. This Agreement shall be construed without
-------------------------
regard to any presumption or other rules requiring construction against
the party causing the Agreement to be drafted.
7.16 [*********************************************************************
************************************************************************
************************************************************************
************************************************************************
*****************************************************]
7.17 Payments on Business Days. Any payments to be made hereunder which become
-------------------------
due and payable on a day other than a business day shall be due on the
business day immediately following the day on which such payment would
otherwise have been due hereunder.
PORTIONS OF THIS EXHIBIT MARKED BY "*" HAVE BEEN OMITTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT. THE OMITTED PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.
50
7.18 Prior Agreements. PHE agrees, and PHE shall cause PHE Providers to agree,
----------------
that this Agreement supersedes any oral or written agreement to the
contrary now existing or hereinafter entered into between PHE or PHE
Providers and Covered Persons or Persons acting on Covered Persons'
behalf, [**************************************************************
***********************************************************************
*****************]
7.19 No Third-Party Beneficiaries. Except as provided in Section 3.6(h)(iv),
----------------------------
this Agreement is not a third-party beneficiary contract and shall not in
any manner whatsoever confer any rights upon or increase the rights of
any Covered Person with respect to the Plan or the duties of the Plan to
any Covered Person.
*****
IN WITNESS WHEREOF, this Agreement has been duly executed by the
authorized representatives of the Plan and PHE, on July 24, 1997 to be
effective on the Effective Date.
HIP OF NEW JERSEY, INC. PINNACLE HEALTH ENTERPRISES, L.L.C.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------- --------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------- ------------------------------
Title: Chairman and CEO Title: Senior Vice President and
------------------------------ Chief Financial Officer
----------------------------
Date: July 24, 1997 Date: July 24, 1997
-------------------------------- ------------------------------
PORTIONS OF THIS EXHIBIT MARKED BY "*" HAVE BEEN OMITTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT. THE OMITTED PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.
51
