"ALL SECTIONS MARKED WITH TWO ASTERISKS ("**") REFLECT PORTIONS WHICH HAVE
BEEN REDACTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION BY PROSPECT MEDICAL HOLDINGS, INC. AS PART OF A REQUEST FOR
IPA MEDICARE SHARED RISK SERVICES AGREEMENT
The undersigned parties to the PacifiCare IPA Medicare Shared Risk
Services Agreement between PacifiCare of California ("PacifiCare") and Santa
Xxx - Tustin Physicians' Group ("IPA") do hereby amend said Agreement as
1. Paragraph 1.19 "MONTHLY HCFA PAYMENT" is amended in full to read as
1.19 MONTHLY HCFA PAYMENT - is the revenue received by PacifiCare
each month from HCFA, as determined by HCFA, for the Medical and hospital
Services each Subscriber is to be provided minus any Benefit Withhold.
2. Paragraph 1.34 "BENEFIT WITHHOLD" is added to read as follows:
1.34 BENEFIT WITHHOLD - is the portion of the HCFA revenue received and
retained by PacifiCare each month as outlined in Paragraph 5.01, which is
earmarked for provision of benefits to Subscribers which are offered in
addition to Medical Services and Hospital Services.
3. Paragraph 5.01 is amended in full to read as follows:
A. BENEFIT WITHHOLD
PacifiCare shall retain [ ** ] of the revenue received each
month from HCFA to fund the following Subscriber benefits. These benefits
are outlined more specifically in the Secure Horizons Medical and Hospital
Subscriber Agreement (see Attachment C).
1) Outpatient prescription drugs
2) Acute hospital days greater than 150/year
3) Respite Care
4) Immunosuppressive drugs
5) Mammography (see Section E below)
IPA shall be given the opportunity to share in any savings
which may be present in the Benefit Withhold fund through the Benefit
Withhold Incentive Program as outline in Attachment E.
B. MONTHLY HCFA PAYMENT
[ ** ] of the Monthly HCFA Payment and LESS [ ** ] of the
Monthly HCFA Payment as payment for the premium for Individual Stop Loss
coverage. The payment per Subscriber per month by PacifiCare to IPA shall be
increased or decreased to reflect increases or decreases made by HCFA in the
Monthly HCFA Payment. PacifiCare shall make monthly retroactive adjustments
to reflect adjustments made by HCFA, if any.
PacifiCare shall provide IPA appropriate documentation in support of the
actual Capitation Payment made. Should IPA desire additional billing
information, PacifiCare shall make available for inspection other mutually
agreed upon documents, upon thirty (30) days prior written notice from IPA.
IPA shall have the right to reasonably audit PacifiCare's books and records
directly relating only to IPA's Capitation Payment determinations upon thirty
(30) days prior written notice at IPA's sole expense.
C. SUBSCRIBER PREMIUM (if applicable)
IPA shall receive [ ** ] per Subscriber per month as payment of
the IPA's portion of the Member Premium.
D. RETIREE SUBSCRIBER COMPENSATION
IPA shall receive an additional per month payment from PacifiCare
for certain Retiree Subscribers whose benefit plans permit a lesser
Copayment. This additional amount shall be determined by PacifiCare based on
the number of Retiree Subscribers enrolled each month in each of the
Copayment categories set forth below.
Copayment Paid Monthly Payment
By Retiree Subscriber Per Retiree Subscriber
$ 0 $ [ ** ]
$ 1 $ [ ** ]
$ 2 $ [ ** ]
$ 3 $ [ ** ]
$ 4 $ [ ** ]
$ 5 [ ** ]
IPA shall receive [ ** ] for each screening and diagnostic
mammography study performed above the 1987 PacifiCare-wide baseline, specific
to the Secure Horizons program, for such studies. (This baseline equals 267
studies per 1,000 adult females.) The amount due to IPA shall be calculated
based upon utilization data submitted by IPA and shall be paid within one
hundred and fifty (150) days of the end of the current calendar year.
F. INSTITUTION-TO-INSTITUTION TRANSFERS
IPA shall xxxx PacifiCare and PacifiCare shall pay for Medical
Services provided to Subscribers who enroll with IPA through a transfer from
another PacifiCare contracted-IPA and who are in a skilled nursing facility,
acute care hospital, or are receiving any other type of acute institutional
care at time of enrollment with IPA. Medical Services provided to such
Subscribers shall be reimbursed under this special program until the
Subscriber is discharged from the institutions noted above. If Subscriber is
discharged from such institution to home with home health services being
provided in-lieu of hospitalization, such home health services will be
covered under this program as well. Reimbursement to IPA for these Medical
Services shall be at the Cost of Care rates included in Attachment A4, but no
greater than the ISL deductible per Subscriber during the Initial Term or any
subsequent term of this Agreement.
IPA shall batch these bills together and identify the bills as
institution-to-institution prior to submitting bills to PacifiCare. Bills
must be submitted to PacifiCare no later than sixty (60) days from the
provision of Medical Services. Expenses for Medical Services identified as
institution-to-institution and rendered from January 1, 1991 through December
31, 1991 only will be included in the institution-to-institution program. A
final claim must be filed for such Medical Services by March 31, 1992 to be
reimbursed under this institution-to-institution program.
4. Attachment A "HOSPITAL SERVICES" is amended in full to read as follows:
See Exhibit 1, attached hereto and incorporated herein by this reference.
5. Attachment B "MEDICAL SERVICES", Section II (Medical Services
Exclusions), item (b) which read as noted below SHALL BE DELETED.
b. Outpatient mental health visits in excess of twenty (20) visits per
6. Attachment A5 "HOSPITAL INCENTIVE PROGRAM", Section (b) HOSPITAL
SERVICES BUDGET shall be amended in full to read as follows:
b. HOSPITAL SERVICE BUDGET - The Hospital Services Budget shall equal
[ ** ] of the Monthly HCFA Payment for those Subscribers designating IPA as
their Participating Medical Group, MINUS [ ** ] of such HCFA Payment in
consideration of the Reinsurance program as set forth in subsection (c) (4)
7. Attachment C "SECURE HORIZONS MEDICAL AND HOSPITAL SUBSCRIBER AGREEMENT"
is amended in full as follows:
See Exhibit 2, attached hereto and incorporated herein by this reference.
8. Attachment E "PHARMACY CONTROL PROGRAM" is deleted in full and shall be
replaced with "BENEFIT WITHHOLD INCENTIVE PROGRAM" as follows:
See Exhibit 4, attached hereto and incorporated herein by this reference.
The effective date of this Amendment shall be January 1, 1991.
By signing below, both parties hereto have executed and agreed to this
PACIFICARE OF CALIFORNIA IPA
SANTA XXX-TUSTIN PHYSICIANS
By: /s/ Xxxxx X. Xxxxx By: /s/ Xxxxxx X. Xxxxx
Xxxxx X. Xxxxx, Vice President Title: Pres.
Date: 10/19/90 Date: 10/28/90
Hospital Services are authorized by IPA, are initially paid by PacifiCare
and, except as otherwise indicated, are the financial responsibility of
PacifiCare and IPA. A summary of most Hospital Services includes the
1. INPATIENT HOSPITAL CARE - Medically Necessary inpatient
hospital care, as defined by Medicare, but limited to a total
of one hundred fifty (150) days per Subscriber per Year.
Unlimited days of inpatient hospital care shall be provided to
Subscribers, but PacifiCare shall be financially responsible
for days in excess of one hundred fifty (150) days. Subscriber
shall be assigned semi-private units, unless medical necessity
dictates private accommodations. Where the Subscriber requests
private accommodations, not required for medical purposes, the
incremental difference in fee-for-service rates shall be the
responsibility of the Subscriber. A summary of inpatient care
a. Medical/Surgical Care, Intensive Care, Cardiac Care and
other special care units (including Hospital Services
associated with non-experimental transplants as defined
b. Inpatient psychiatric;
c. Nursing Services, meals, drugs, medications (excluding take-
home medications), blood transfusions;
d. Medical and Surgical supplies and appliances;
e. Inpatient rehabilitation services, such as: inpatient
physical, occupational and speech therapy;
f. Inpatient alcohol and drug treatment and rehabilitation.
2. SKILLED NURSING - Medically Necessary Skilled Nursing Facility
care, as defined by Medicare. Patients shall be assigned
semi-private units, unless medical necessity dictates private
accommodations. Where the Subscriber requests private
accommodations, not required for medical purposes, the
incremental difference in the fee-for-service rates shall be
the responsibility of the Subscriber. Skilled nursing
facilities must be Medicare licensed and approved.
3. HOSPITAL BASED PHYSICIAN SERVICE - All hospital based physician
services where the physician provides the professional
component of an inpatient hospital based service, the hospital
outpatient surgery center service, or a free-standing surgery
center service. The charges of an anesthesiologist are not
included as a Hospital Service. (See paragraph 8 below in this
4. TRANSPORTATION EXPENSES - Medicare approved ambulance services
provided within the IPA Service Area for Subscribers. When a
transfer of Subscriber from one facility to another is authorized
by IPA or PacifiCare, the cost of such transfer shall be a
Hospital service. The method of transfer shall be determined by
IPA, but IPA shall coordinate all Subscriber transfers to or
from Hospital with designated Hospital personnel. Also included
are paramedic services in emergency cases in the IPA Service
5. EMERGENCY SERVICES IN THE IPA SERVICE AREA - IPA Service Area
Emergency Services include emergency room charges and
associated emergency room physician and ancillary charges,
inpatient medical and other Medical Services which may not be
delayed until facilities or physicians of the Hospital or IPA
(or alternatives authorized by IPA) can be used without possible
serious effects to the health of the Subscriber. Such services
must be Medically Necessary Emergency Services.
6. HOME HEALTH CARE - As determined to be Medically Necessary, as
defined by Medicare and provided in lieu of hospitalization, as
mutually agreed to by IPA, Hospital and PacifiCare, including
any required DME and IV Therapy Services.
7. HOSPICE CARE - Should be coordinated with Medicare for special
8. OUTPATIENT SURGERY - Facility, supply charges and the
professional component of a hospital based physician service
(as noted in paragraph 3 above) for outpatient surgery done
either at Hospital or a free-standing surgery center.
9. END STAGE RENAL DISEASE - Facility and professional charges for
inpatient and outpatient dialysis services for Subscribers who
are medically determined to have End Stage Renal Disease
after enrollment in one of PacifiCare's health plans.
10. OTHER HOSPITAL SERVICES
a. Devices surgically implanted during a hospital confinement
or during an outpatient surgery performed at the Hospital
outpatient surgery center or a free-standing surgery center.
b. Treatment programs for outpatient substance abuse as defined
c. Appealed Services - Hospital Services denied by IPA and
PacifiCare which are found on appeal or arbitration
through the Subscriber grievance resolution process to
be Hospital Services which the Subscriber was entitled
to have furnished under the PacifiCare Secure Horizons
health care delivery system.
d. Chemotherapy Drugs (inpatient and outpatient).
11. HOSPITAL SERVICES EXCLUDE THE FOLLOWING:
a. Durable Medical Equipment, except as provided in paragraphs
6 and 10(a) above.
b. Medical Services in the IPA Service Area as defined by
Attachment B hereto.
c. Outpatient prescription drugs, including immunosuppressive
d. All out-of-IPA Service Area expenses, except those elective
referrals as authorized by IPA. PacifiCare, in conjunction
with IPA, shall make all decisions regarding the duration
of a Subscriber's care at the out-of-IPA Service Area
facility and transfer of the Subscriber to an IPA Service
e. Vision materials (lenses and frames) except for those
surgically implanted during cataract surgery.
f. Anesthesiology services (inpatient and outpatient).
g. Experimental procedures, including any type of procedure
not generally recognized as of value by the medical
community and its societies, as determined by PacifiCare
and IPA, in conformance with state and federal law.
h. Cosmetic Surgery, except when performed to correct or
repair the physical functioning of a body part as a result
of a functional disorder or accidental injury.
i. Inpatient hospital care in excess of one hundred fifty
(150) days per Subscriber per Year except as provided in
Paragraph 1 of this Attachment A.
j. Skilled nursing care in excess of one hundred (100) days
per Subscriber per Year.
k. Respite Care
SECURE HORIZONS MEDICAL AND HOSPITAL SUBSCRIBERS AGREEMENT
Secure Horizons Medical and Hospital Subscriber Agreement is available
upon request. A summary of the Schedule of Benefits is attached.
BENEFIT WITHHOLD INCENTIVE PROGRAM
The purpose of the Benefit Withhold Incentive Program (BWIP) is to
provide an incentive to the IPA to xxxxxx the efficient utilization of the
Subscriber benefits outline in Attachment C, Section A "BENEFIT WITHHOLD",
most particularly prescription drugs. The BWIP gives the IPA the ability to
share in any savings when comparing actual utilization against the budgeted
The budget will be set at [ ** ] of the monthly revenue received from
HCFA for Subscribers who have designated IPA as their Participating Medical
Debited against this budget will be the actual expenses paid by
PacifiCare for the earmarked benefits as outlined in Attachment C of those
Subscribers who have designated IPA as their Participating Medical Group for
the applicable month. The IPA will share [ ** ] of any savings in comparing
the budget and actual expenses. PacifiCare shall provide, on a quarterly
basis, utilization reports pertaining to the cost of prescriptions written on
a physician specific basis. A final calculation and final payment will be
made within one hundred fifty (150) days of the end of each Year.
IPA agrees to participate in a generic drug substitution program and
formulary program established by Pacificare's Quality Assurance Committee.