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EXHIBIT 10(b)
ADMINISTRATIVE SERVICES CONTRACT
THIS AGREEMENT dated the 1st day of October, 1995, is by and between
the Public Education Employees Health Insurance Board ("Board") and Southland
National Insurance Corporation ("Administrator").
W-I-T-N-E-S-S-E-T-H
THAT, WHEREAS, pursuant to Act No. 83-455 of the 1983 Regular Session
of the Legislature of Alabama ("Act"), the Board was empowered to become
self-insured and to employ an Administrator for the furnishing of
administrative services;
WHEREAS, The Board was empowered to award an Administrative Services
Contract on a competitive basis; WHEREAS, the administrative services
desires by the Board were let for bid and the Administrator made the
successful bid for such contract; and
WHEREAS, the Board and the Administrator wish to formalize the Board's
acceptance of the bid of the Administrator by this writing.
NOW THEREFORE, THE PREMISES CONSIDERED, and for and in the further
consideration of the mutual covenants of the parties as hereinafter contained,
the receipt and sufficiency of which is acknowledged, the parties agree as
follows:
1. ADMINISTRATIVE SERVICES. The Administrator agrees to
provide administrative services only for the Board under the Board's
self-funded hospital indemnity program, dental program, cancer program, and
vision program. The services to be provided by the Administrator shall include
all such services as are usually provided by the Claim Department of an
Accident and Health Insurance Company. Such services shall include, but shall
not be limited to:
a. The review and processing of claims submitted
directly to the Administrator by the plan
participant or his assignee in accordance
with the Act;
b. The payment of claims with funds provided to
the Administrator by the Board.
c. The maintenance of a toll free telephone
number for plan participants to use in
connection with claims and general
information;
d. Acceptance of collect telephone calls from
plan participants for questions or
information in connection with claims and
general information;
e. The provision of an answering device for
after hours use, holiday use, and weekend use
under the toll free telephone number which
said
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answering device will be equipped with a
recorded message with specific instructions
to the plan participant calling, and which
said recorded message shall use the name
Public Education Employees Health Insurance
Program (PEEHIP); and
f. Notification of plan participant of payment
of Plan benefits to an assignee.
2. DOCUMENTS. The Administrator will provide advice to
PEEHIP in connection with the drafting of any documents requested.
Additionally, the Administrator will furnish to PEEHIP and the participant, the
participant I.D. card, plan documents, a summary plan description, or other
printed material required by PEEHIP within sixty (60) days after PEEHIP's
approval of said documents.
3. BUSINESS RECORDS AND REPORTS. The Administrator will
maintain the following records:
a. A daily register of all drafts issued by the
Administrator under the Plan and all drafts
clearing the account which is to be funded by
the Board and maintained by the Administrator
for the payment of claims;
b. A monthly check register and bank
reconciliation statement;
c. Claim files for each claim submitted; and
d. Such other records as were described in the
bid for this Administrative Services Contract
submitted by the Administrator and accepted
by the Board.
The Administrator will furnish to the Board, at a minimum, the
following reports:
a. A quarterly utilization report;
b. A monthly claim report;
c. A monthly update for aggregate attachment points;
d. A monthly statement of the Administrator's fee;
e. Periodic reports of member eligibility and status;
f. Periodic summarized claim's history for the purposes
of Board budgeting and forecasting;
g. A full annual accounting of funds received and claims
paid or other use of such funds provided to the
Administrator by the Board not later than ninety (90)
days from the end of each policy year;
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h. Such other records as were contained in the bid for
the administrative services contract submitted by the
Administrator and accepted by the Board; and
i. Any such other reports (management, claim, or
administrative) as shall be reasonably requested by
the Board.
All business records relating to participants, claims, and
administrative documents in connection therewith shall be maintained on a
computer or in hard copy as reasonably requested by the Board.
Upon termination of this Agreement, the Administrator will, upon the
written request of the Board, turn over to the Board all claim and
administrative files and records.
4. CLAIM PAYMENT. Payment of claims submitted by Plan participants
and approved for payment by the Administrator shall be paid with funds provided
to the Administrator by the Board. Claims shall be paid or denied in
accordance with the terms and conditions of the Plan documents as finally
approved by the Board. The Administrator may seek clarification from the Board
regarding Plan Benefit provisions, but the responsibility for interpretation of
such provisions in claims administered remains with the Administrator.
In the event of the denial of any claim by the Administrator, the
Administrator will follow the review procedure provided in the Act. The
Administrator agrees to undertake the defense of any legal action filed against
the Board or Administrator based upon non-payment or declination of benefits.
In the event a Judgment is entered ordering payment of benefits under the Plan,
the Board agrees to pay such benefits. In the event a Judgment is entered
ordering payment in excess of Plan Benefits, the Administrator agrees to pay
such excess.
5. MISCELLANEOUS. In addition to the toll free number furnished for
the Plan participants, the Administrator will make available two (2) home
telephone numbers for two (2) officers of the Administrator to specific
personnel of PEEHIP for emergency purposes.
6. FEES. For the services rendered under the contract, the Board
shall pay to the Administrator a monthly fee equal to the sum of the total
number of employees enrolled in the respective plans multiplied by the
respective employee monthly charge per plan. The formula may also be stated as
follows:
* The aggregate fees shall not exceed 6.642% of claims paid during the
fiscal year. Any adjustment required by this provision will be credited in
October of the next fiscal year. (Not to exceed maximum amount of total
projected annual cost of $1,543,500.)
Employee Monthly Projected Annual
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Coverage Charge Per Plan Cost
-------- --------------- ----
Hospital Indemnity Plan $ .75 x number of enrolled
employees = $
----------------
Dental Plan $ 1.60 x number of enrolled
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employees = $
----------------
Cancer Plan $ .50 x number of enrolled
employees = $
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Vision Plan $ 1.10 x number of enrolled
employees = $
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TOTAL
MONTHLY
FEE = $
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The number of enrolled employees of each Plan shall be submitted by the Board
to the Administrator no later than the first (1ST) Tuesday of each month.
Payment shall be made to the Administrator not later than the tenth (10TH) day
of each calendar month during the term of this Agreement.
7. AUDIT. The Board, or its designee, shall be allowed to conduct an
annual audit of the claims and administrative records of the Administrator.
The Administrator agrees to make its records and personnel available as shall
be reasonably necessary for the auditing agent to perform such audit during
business hours of the Administrator.
8. DUTIES OF THE BOARD.
The Board shall conduct the initial and any subsequent enrollment
periods. The Board shall furnish to the Administrator a list of all
applications, cancellations and changes in status of eligible participants.
Such data shall be provided to the Administrator by the Board on magnetic tape
media in a format to be determined by the Board and approved by the
Administrator. Any updates for all such data shall not be later than monthly.
The Administrator shall have the right to rely and act upon all such
information furnished until notified by the Board that the data is incorrect.
The Board shall provide all funds to the Administrator necessary for
the payment of claims to plan participants and their assignees. Administrator
fees shall be paid promptly upon the request of the Administrator.
The Board shall provide all information and written material to the
plan participants and their assignees. Administrator fees shall be paid
promptly upon the request of the Administrator.
9. TERM. The term of this contract shall begin on the 1ST day of
October 1995 and shall terminate on the 30TH day of September, 1998.
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IN WITNESS WHEREOF, the parties have executed this Agreement on the
date set opposite their respective signatures.
SOUTHLAND NATIONAL INSURANCE
CORPORATION
Date: 11/1/95 By: /s/ Xxxxxx X. Xxxx
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As Its: Vice President
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PUBLIC EDUCATION EMPLOYEES
HEALTH INSURANCE BOARD
Date: 11/1/95 By: /s/ Xxxxxxx Xxxxx
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As Its: Deputy
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