Exhibit 10.29
CONTRACT MODIFICATION AGREEMENT NO. 2 TO
MEDICAL SERVICES AGREEMENT
BETWEEN COMMONWEALTH OF PENNSYLVANIA,
DEPARTMENT OF CORRECTIONS
AND PRISON HEALTH SERVICES, INC.
This Modification No. 2 ("Modification") to the Medical Services Agreement
Between Commonwealth of Pennsylvania, Department of Corrections and Prison
Health Services, Inc. ("Contract") is made this 28th day of October, 2005, by
and between the Commonwealth of Pennsylvania, Department of Corrections
("Department") and Prison Health Services, Inc. ("PHS").
WHEREAS, the Department and PHS are parties to the Contract which went into
effect on September 1, 2003; and
WHEREAS, under the Contract PHS delivers general health care and
specialized medical services to inmates in the custody of the Department; and
WHEREAS, the Attachment Four, Supplemental Provisions, is part of the
Contract; and
WHEREAS, Section 10 of Attachment Four has a provision concerning Outside
Medical Service Cap settlements, and
WHEREAS, since the Contract took effect a dispute has arisen between the
Department and PHS over the meaning and timing of the Outside Medical Services
Cap settlements; and
WHEREAS, the Department and PHS recognize that there are ambiguities in the
meaning and timing of the Outside Medical Services Cap settlements language in
Attachment Four referred to above; and
WHEREAS, this dispute could result in litigation between the Department and
PHS over the meaning of the timing of Outside Medical Services Cap settlements
in Attachment Four; and
WHEREAS, the Department and PHS prefer and intend to resolve their dispute
over the meaning and timing of Outside Medical Services Cap settlements in
Attachment Four referred to above through an agreement rather than litigation;
and
WHEREAS, the Department and PHS through a modification of the Contract seek
an interpretation of Attachment Four that is acceptable to both parties and
provides a clarification of the ambiguities; and
WHEREAS, the PHS Pricing Proposal, Attachment #3, is part of the Contract;
and
WHEREAS, the Department also seeks a change in the annual increase
provisions of Section I of Attachment #3 as part of the Commonwealth effort to
reduce costs; and
WHEREAS, PHS is agreeable to a change in Section I of Attachment #3 to
assist in the Commonwealth's cost control efforts;
NOW THEREFORE, in consideration of the mutual covenants herein contained,
and the considerations identified herein, and intending to be legally bound, the
Department and PHS agree as follows:
1. This Modification serves as a clarification of the Outside Medical
Services Cap settlement provisions of the Contract, in particular Section 10 of
Attachment Four.
2. Contract year-to-date cost settlements of the Outside Medical Services
Cap will be made on an accrual basis at the conclusion of each contract quarter.
The first quarterly pro rated cap will be one fourth of PHS' full yearly
responsibility for Outside Medical Services expenses. Additional expenses above
this amount will be pro rated between the parties on a 50/50 cost sharing basis
up to one fourth of the shared cost amount stated in the Contract. Corrections
will be responsible for 100% of the quarterly Outside Medical Services expenses
in excess of the sum of both maximums stated above. Corrections will reimburse
PHS within 45 days of receipt of quarterly documentation supporting expenditures
for Outside Medical Services. For each subsequent quarter, PHS will consider the
sum of all previous quarters in the then current contract year plus the current
quarter's maximum PHS Outside Medical Services liability total for all quarterly
expenses actually incurred less the amount previously paid by the Commonwealth
to determine the amount due PHS for that quarter or the amount to be returned to
the Commonwealth. A final settlement using the actual amounts paid by PHS for
Outside Medical Services that takes into account the impact of all 4 quarterly
settlements will occur within 180 days of the end of each contract year.
3. PHS will include dialysis treatment costs for services previously
provided at SCI Graterford and transferred to SCI Laurel Highlands as eligible
costs toward the Outside Medical Services Cap. This includes one-time equipment
purchases and ongoing operational costs to operate the program. It does not
include staffing costs, which are covered in the PHS base monthly fees. Costs
will be reported in the months incurred in the same manner as other costs are
reported for Outside Medical Services.
4. This Modification also serves to change the future year annual cost
adjustments to the Contract. For contract year 3 (September 1, 2005 to August
31, 2006), the scheduled annual increase will be applied, effective September 1,
2005, as per the existing Contract terms. Beginning January 1, 2006 and
continuing through August 31, 2006, PHS will reduce its monthly base fees to the
Department by $62,500, resulting in a total base fee reduction of $500,000 for
the contract year.
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5. In calculating the new base fees for contract year 4 (September 1, 2006
to August 31, 2007), the annual increase will be applied to the contract year 3
base fees net of the $500,000 discussed in Item #4.
6. The annual increase to base fees and respective aggregate cap specified
in the Contract for contract years beginning September 1, 2006 and September 1,
2007 would be modified to refer to the trailing twelve month percentage change
in the Health Services component of the Employment Cost Index for Total
Compensation for Private Industry Workers, by Industry and Occupational Group,
for the most recent quarter prior to the start of the contract years, as
published by the United States Department of Labor - Bureau of Labor Statistics.
7. Except as specifically modified herein, all other terms and conditions
of the Contract shall remain unchanged and in full force and effect.
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IN WITNESS WHEREOF, and intending to be legally bound, the parties
hereto subscribe their names to this instrument.
PRISON HEALTH SERVICES, INC. COMMONWEALTH OF PENNSYLVANIA
DEPARTMENT OF CORRECTIONS
/s/ Xxxx Xxxxxxx /s/ Xxxxxxx X. Xxxxx
------------------------------------- ----------------------------------------
By: Xxxx Xxxxxxx By: Xxxxxxx X. Xxxxx, PhD.
President Secretary
Date: September 13, 2005 Date: September 15, 2005
/s/ Xxxxxx X. Xxxxxxxx
-------------------------------------
By: Xxxxxx X. Xxxxxxxx
Secretary
Date: September 13, 2005
/s/ Xxxx X. XxXxxxxx Date: October 26, 2005
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Comptroller's Office
Approved for Form and Legality:
/s/ Illegible Date: September 22, 2005
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Office of Chief Counsel
Pennsylvania Department of
Corrections
/s/ Illegible Date: October 4, 2005
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Office of General Counsel
/s/ Illegible Date: ___________________
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Office of Attorney General
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