EXHIBIT 10.35
AMENDMENT TO
MASTER AGREEMENT FOR PHARMACY SERVICES
AGREEMENT made and entered into as of the 19th day of September 1997 by and
between Vitalink Pharmacy Services, Inc. ("Vitalink") and ManorCare Health
Services, Inc. ("MCHS").
WHEREAS, Vitalink and MCHS have previously entered into that certain Master
Agreement for Pharmacy Services dated June 1, 1991 (the "Agreement"); and
WHEREAS, Vitalink and MCHS desire to amend the Agreement.
NOW, THEREFORE, in consideration of the mutual covenants herein, and other
good and sufficient consideration, receipt of which is acknowledged, the parties
agree as follows:
1. Section 1 of the Agreement is replaced in its entirety by the
following new Section 1:
1. TERM. The term of this Agreement shall be from June 1, 1991 to
September 30, 2002. At each October 1 during the remaining period of
this Agreement, the term shall automatically renew for an additional
one (1) year period unless either party notifies the other party of
its intent not to renew no later than ninety (90) days prior to each
such October 1.
2. Section 5 of the Agreement is replaced in its entirety by the
following new Section 5:
5. DRUG CHARGES:
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A. Vitalink's charges for pharmaceuticals under each separate
Pharmacy Services Agreement shall be based upon prevailing market
rates for each Facility. "Market rates" shall be defined as those
within the fiftieth percentile (50%) of charges paid by similar
licensed non-MCHS facilities that receive similar services from
Vitalink. MCHS shall be allowed to audit Vitalink's books and records
to verify market rates.
B. Effective January 1, 1998, Vitalink's charges for
pharmaceuticals under each separate Pharmacy Services Agreement for
residents who charges are paid by a third party payor such as an
insurance company, HMO, or Medicare risk contract payor shall be as
stated in Exhibit A, attached hereto.
3. Section 6 of the Agreement is replaced in its entirety by the
following new Section 6:
6. BILLING FOR PHARMACY SERVICES:
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A. At the discretion of MCHS, the xxxxxxxx for pharmacy services
to residents at each Facility who are private pay or whose care is
otherwise paid for by non-governmental third party payors shall be
handled in either of the following ways:
i) MCHS will perform all billing and collection activity,
and incur any and all bad debt, for residents at each
Facility who are private pay or
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whose care is otherwise paid for by non-governmental
insurance programs. Thus, for such residents, Vitalink shall
xxxx Facility for such private pay or insurance residents
and in consideration of the above services to be provided
by, and the assumption of the risk of bad debts, the
Facility will receive a 3% administrative fee off the amount
of such invoice for private pay or non-governmental
insurance residents; or
ii) Vitalink shall xxxx and collect each resident directly
and shall be responsible for any resulting non-payment or
bad debt. There shall be no administrative fee paid.
B. Vitalink shall xxxx MCHS for all pharmaceuticals provided to
Medicare residents and MCHS shall then xxxx the Medicare program for
all Medicare residents.
C. Vitalink shall directly xxxx the appropriate governmental
entity for all Medicaid residents.
D. In the event either the Medicare program or any state Medicaid
program requires that xxxxxxxx be handled in a specific manner, the
parties agree that this Agreement shall automatically be amended to
comply with such requirements(s).
4. Section 15 of the Agreement is replaced in its entirety by the
following new Section 15:
15. RELATED PARTY DOCTRINE. The parties acknowledge the existence of
the Medicare principal commonly known as the related party doctrine
(hereinafter "Related Party Doctrine"). While the parties believe
that the Related Party Doctrine does not apply because the parties
and/or the transactions herein are covered by an exception or
exceptions thereto, the parties desire to make provisions in the event
that there is a ruling otherwise. Therefore, as of January 1, 1998,
in the event that the Medicare program (including any fiscal
intermediary or other agent of the Medicare program) applies to the
Related Party Doctrine, in whole or in part, to any Facility cost
report or other claim for reimbursement, then the Facility shall be
solely responsible for any economic impact in which such application
results. The parties hereto further acknowledge Vitalink shall in no
way be responsible for the difference between the amount Vitalink
billed the Facility for Medicare residents and the amount actually
reimbursed or proposed to be reimbursed by the Medicare program to the
Facility. This section shall survive termination of this Agreement.
5. The following new Section 20 shall be added to the Agreement:
20. SERVICES. During the term of this Agreement, Vitalink shall
provide such ancillary services such as computer-prepared patient
medical records, disease management services, drug contra-indications
and the like, at the highest levels that are available within the
institutional pharmacy industry.
6. The following new Section 21 shall be added to the Agreement:
21. ARBITRATION. Any dispute between the parties shall be subject to
arbitration before a single arbitrator pursuant to the commercial
arbitration rules of the
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American Arbitration Association. Such arbitration shall be held in
Xxxxxxxxxx County, Maryland. Each party shall pay their own expenses
and the parties shall be equally responsible for the expenses of the
Arbitrator.
7. Each Pharmacy Agreement for the Facilities shall be deemed to have been
amended consistently with the terms, conditions and obligations contained
herein.
8. Except as specifically provided herein, the Agreement remains in full
force and effect.
IN WITNESS WHEREOF, the parties enter into this Agreement on the date first
above written.
VITALINK PHARMACY SERVICES, INC.
ATTEST: /s/ Xxxxxx X. Xxxxxx III By: /s/ Xxxxx X. XxXxxxx
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Secretary
Title: President
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MANORCARE HEALTH SERVICES, INC.
ATTEST: /s/ K. Xxxxx Xxxxxxx By: /s/ Xxxxx X. Xxxxx
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Assistant Secretary
Title: Senior V.P.
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EXHIBIT A
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1. MCHS will pay Vitalink a percentage of the per diem rate received by MCHS
for each managed care patient whether such patient receives medication or
not, as set forth below.
2. If a managed care patient in a MCHS facility receives no medications,
Vitalink will be paid 7.2% of the per diem rate received by MCHS for such
patient.
3. If the contracted per diem rate received by MCHS includes routine
medications only (i.e., oral, topical medications and all insulin),
Vitalink will be paid 7.2% of the per diem rate for each day of service.
4. If the contracted per diem rate received by MCHS includes routine (i.e.,
oral, topical medications and all insulin) and extraordinary (i.e.,
injectible (excluding insulin) and infusion medications) Vitalink will be
paid 13% of the per diem rate for each day of service.
5. If the managed care contract with MCHS excludes all medications, MCHS will
so advise Vitalink in writing in advance of accepting any such patient.
Vitalink and the managed care organization will thereafter negotiate drug
prices separately. Vitalink will be solely responsible for the billing and
collection of any services provided in such circumstances.
6. The percentages described above will be paid for all MCHS patients covered
by managed care contracts and referred through the MCHS Coordinated Care
Center. MCHS will notify the pharmacy at the time of admission that a
patient is covered under a managed care contract. If such patients are not
identified at such time, then usual and customary pricing will be utilized
by Vitalink and paid by MCHS.
7. All managed care patients will be subject to a formulary as agreed upon by
Vitalink and the managed care organization which identifies those drugs
which may be therapeutically substituted. In addition, drugs with extremely
high cost (i.e., AWP per dose greater than $35.00) will be carved out of
any such contract between the managed care organization and MCHS and be
treated separately. In the event that Vitalink and the managed care
organization cannot agree to such formulary, Vitalink has the right to
refuse to provide services to the patients of such managed care
organization. In the event that Vitalink so refuses, Manor Care shall have
the right to identify an alternative provider for such services.
8. The percentages set forth above will be reviewed periodically (i.e., every
six months). The review will compare the current actual percentages (based
on actual utilization at usual and customary charges divided by the
applicable per diem rates) to those percentages set forth above. The
percentage of the per diem rate to be billed thereafter will be the
percentages set forth above plus or minus 50% of the difference between
those percentages and the current actual percentages depending on whether
the current actual percentages are higher (plus) or lower (minus) than the
percentages set forth above.
9. At the time of discharge, any drugs not administered to managed care
patients, are to be returned to the pharmacy or disposed of in compliance
with government regulations. Unused medications may not be sent home with
patients.
