"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
CONFIDENTIAL TREATMENT."
1994 AMENDMENT TO
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 ▇▇▇-TUSTIN
PHYSICIANS GROUP, INC. ("IPA") do hereby amend said Agreement as follows:
1. Section 3.24 is amended in full to read as follows:
"3.24 ACCOUNTS PAYABLE SYSTEM - IPA agrees to operate its accounts
payable system in a manner which assures that providers of authorized Medical
Services who are Member Physicians and non-Member Physicians receive payment
for Medical Services rendered to Subscribers within the timeframe specified
by Federal regulation. For a claim which is contested or is not "clean",
either payment must be made to the Member Physician or non-Member Physician,
or an initial determination notice must be sent to the Subscriber within
sixty (60) calendar days of IPA's receipt of such claim from Member
Physicians and non-Member Physicians. Any denied claim which is afterwards
determined by HCFA as payable and which falls under IPA financial
responsibility, must be paid by IPA upon notice and/or receipt of claim. In
the event IPA fails to meet the payment timeliness discussed in this Section
3.24, in addition to exercising any other remedies it may have under this
Agreement, PacifiCare may take actions to assist IPA in operating its
accounts payable system including, but not limited to, paying IPA's Member
Physicians and Non-Member Physicians and charging the claim amount paid
against IPA capitation in addition to an administrative fee for performing
such services."
2. Section 3.30, WITHDRAWAL OF A MEMBER PHYSICIAN, shall be added as follows:
"3.30 WITHDRAWAL OF A MEMBER PHYSICIAN - In the event IPA seeks to
withdraw one or more Member Physicians from providing or arranging Health
Care Services to Subscribers under this Agreement, IPA must notify PacifiCare
of such withdrawal in writing at least sixty (60) days prior to the effective
withdrawal date. After the effective date of such withdrawal, IPA shall still
be responsible to provide or arrange Medical Services to the affected
Subscribers with the other Member Physicians."
3. Attachment A5 "HOSPITAL INCENTIVE PROGRAM", Section (b) and
subsection (c)(4) under 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 [ ** ]
1
[ ** ] of such HCFA Payment in consideration of the Reinsurance program as
set forth in subsection (c) (4) herein."
"c. 4. REINSURANCE LIMIT - any amount of hospital services expenses as
defined in subsection (c) (1) through (3) above, in excess of [ ** ] per
Subscriber per Year; MINUS."
4. Paragraph 5.01, Section A, BENEFIT WITHHOLD; and Section B, paragraph 1,
only, MONTHLY HCFA PAYMENT, is amended 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.
In addition, upon implementation of the Secure Horizons preventative
dental benefit, PacifiCare shall retain an additional [ ** ] of the revenue
received each month from HCFA to fund the preventative dental benefit.
B. MONTHLY HCFA PAYMENT (first paragraph only amended)
[ ** ] 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."
5. Attachment E, "BENEFIT WITHHOLD INCENTIVE PROGRAM" is amended in full as
follows:
See Exhibit 1, attached hereto and incorporated herein by this reference.
2
6. Attachment G, DIVISION OF FINANCIAL RESPONSIBILITY, is amended in full to
read as follows:
See Exhibit 2 attached hereto and incorporated herein by this reference.
The effective date of this Amendment is January 1, 1994
By signing below, both parties hereto have executed and agreed to this
Amendment.
PACIFICARE OF CALIFORNIA SANTA ▇▇▇-TUSTIN PHYSICIANS GROUP, INC.
By: By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------- ----------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇, Vice President
Print Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------
Title: Pres.
-------------------------------
Date: Date: 12/22/93
----------------------------- -------------------------------
Tax I.D.: ▇▇-▇▇▇ ▇▇▇▇
----------------------------
3
EXHIBIT 1
ATTACHMENT E
BENEFIT WITHHOLD INCENTIVE PROGRAM
----------------------------------
The purpose of the Benefit Withhold Incentive Program (BWIP) is to
provide an incentive to the IPA to ▇▇▇▇▇▇ the efficient utilization of the
following Subscriber benefits:
1) Outpatient prescription drugs
2) Acute hospital days greater than 150/year
3) Respite Care
4) Immunosuppressive drugs
5) Mammography (see Section E of Attachment C)
The BWIP gives the IPA the ability to share in any savings when
comparing actual utilization against the budgeted withhold amount.
The budget will be set at [ ** ] of the monthly revenue received from
HCFA for Subscribers who have designated IPA as their Participating Medical
Group.
Debited against this budget will be the actual expenses paid by
PacifiCare for the earmarked benefits list above in this Attachment for
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.
4
EXHIBIT 2
DIVISION OF FINANCIAL RESPONSIBILITY
The attached template outlines the division of financial responsibility
between IPA, the Hospital Incentive Program (HIP), and PacifiCare (PC), the
intent being to clarify Medical Service and Hospital Service categories in
order to provide for accurate administration. As it is impossible to include
every service available, the template serves as a model under which broad
Medical Service and Hospital Service categories suggest the appropriate
financial responsibility for services or items not specifically listed.
5 SANTA ▇▇▇-TUSTIN PHYSICIANS
MEDICAL GROUP, INC.
EXHIBIT 2
DIVISION OF FINANCIAL RESPONSIBILITY
CALIFORNIA
Secure Horizons Shared Risk Agreement
(IPA Capitated, Hospital Incentive Program w/PacifiCare)
A Santa ▇▇▇-Tustin Physicians Medical Group, Inc.
Responsible Party
------------------------------------
List of Benefits - (In area)
----------------- --------- IPA PacifiCare PacifiCare
HIP 100%
AIDS - Professional Component
- Facility Component
Allergy
- Testing
- Serum
Ambulance, Air or Ground - In Area
- Out of Area
Amniocentesis
Anesthetics, Administration of
(Anesthesiology)
Artificial Insemination
Artificial Limbs (DME)
Biofeedback
Blood & Blood Products
(Including Professional Component)
- From Blood Bank [ ** ](1)
- Autologous Blood Donation
Chemical Dependency Rehabilitation
- Inpatient Facility Component
- Inpatient Professional Component
- Outpatient Professional Component
- Outpatient Facility Component
Chemotherapy
- Drugs
- Professional Component
Chiropractic (Medicare Approved Only)
Colostomy Supplies
- Outpatient
- Inpatient
Contact Lenses
- Intraocular lens (surgically
implanted)
- Incident to Cataract Surgery
(not surgically implanted)
Cosmetic Surgery (Medically Necessary)
- Facility Component
- Professional Component
Dental Services (for repair of
accident/injury only)
- Facility Component
- Professional Component
Detox
- Facility Component
- Professional Component
Durable Medical Equipment (DME)
(Medicare Approved Only)
- Surgically Implanted
- Inpatient or S.N.F.
- Outpatient
- Hearing Aids
(1) All references to division of responsibility have been deleted.
6 SANTA ▇▇▇-TUSTIN PHYSICIANS
MEDICAL GROUP, INC.
EXHIBIT 2
DIVISION OF FINANCIAL RESPONSIBILITY
CALIFORNIA
Secure Horizons Shared Risk Agreement
(IPA Capitated, Hospital Incentive Program w/PacifiCare)
IPA Santa ▇▇▇-Tustin Physicians Medical Group, Inc.
Responsible Party
------------------------------------
List of Benefits - (In area) IPA PacifiCare PacifiCare
--------------- --------- HIP 100%
Emergency Admissions
- In Area: - Facility Component
- - Professional Component
- Out of Area; - Facility Component
- Professional Component
Emergency Room Facility Component
- In Area
- Out of Area
Emergency Room Physicians - In Area
- Initial Treatment and Hospital
Based MDs (interpretation)
- Consults
- Out of Area
Employment Physicial
Endoscopic Studies
- With Biopsy [ ** ](1)
- Without Biopsy
Experimental Procedures
Family Planning (Medicare Approved Only)
(e.g.; Amniocentesis)
- Professional Component
- Facility Component
Fetal Monitoring
- Outpatient (diagnostic)
- Inpatient
Genetic Testing
Health Education
Health Evaluation (Physical)
Hearing Aids
Hearing Screening
Hemodialysis
- Inpatient
- Outpatient
Home Health Care
(includes IV or injectables)
Hospice Services (Special Medicare
Reimbursement Program)
- Inpatient
- Professional Component
Hospital Based Physicians (Inpatient)
- Anesthesiology
- Audiology
- Cardiology
- Emergency Room
- Diagnostic Services
- Neonatology
- Neurology
- Nephrology
(1) All references to division of responsibility have been deleted.
7 SANTA ▇▇▇-TUSTIN PHYSICIANS
MEDICAL GROUP, INC.
DIVISION OF FINANCIAL RESPONSIBILITY EXHIBIT 2
CALIFORNIA
Secure Horizons Shared Risk Agreement
(IPA Capitated, Hospital Incentive Program w/PacifiCare)
IPA SANTA ▇▇▇-TUSTIN PHYSICIANS MEDICAL GROUP, INC.
Responsible Party
-------------------------------
List of Benefits - (In area) IPA PacifiCare PacifiCare
---------------- --------- HIP 100%
Hospital Based Physicians (continued)
- Pathology
- Physical Medicine
- Pulmonary
- Radiology
- Radiation Oncology
- Surgeon
Hospitalization, Inpatient Services, Supplies,
Testing
- In Area
- Out of Area
Immunization and Inoculations
- As Medically Indicated
Medicare Approved
- For Work/Travel
Infertility (Diagnosis and Treatment)
- Professional Component
- Facility Component [ ** ](1)
Injections and Injected Substances
(outpatient)
Insulin & Syringes
Laboratory Services
- Outpatient
- Inpatient
Lithotripsy
- Professional Component
- Facility Component
Mammography
Marriage Counseling
Medication
- Inpatient
- Outpatient Covered Injectables
- Outpatient Non-injectables
Mental Health
- Inpatient Facility Component
- Inpatient Professional Component
- Outpatient Professional Component
Nuclear Medicine Diagnostics
Nuclear Medicine Treatment/Therapy
- Facility Component
- Professional Component
Nutritional/Dietetic Counseling
Office Visit Supplies, Splints,
Bandages, etc.
Organ Transplants (non-experimental)
- Facility component
- Professional component
(1) All references to division of responsibility have been deleted.
8
DIVISION OF FINANCIAL RESPONSIBILITY EXHIBIT 2
CALIFORNIA
Secure Horizons Shared Risk Agreement
(IPA Capitated, Hospital Incentive Program w/PacifiCare)
IPA SANTA ▇▇▇-TUSTIN PHYSICIANS MEDICAL GROUP, INC.
Responsible Party
-------------------------------
List of Benefits - (In area) IPA PacifiCare PacifiCare
---------------- --------- HIP 100%
O.P. Surgery
- Facility component
- Professional Component
(Interpretive MDs)
- Professional Component - other
- Anesthesiology
Outpatient Surgery/Facility/Based Physicians
- Anesthesiology
- Audiology
- Cardiology
- Emergency Room
- Diagnostic Services
- Neonatology
- Neurology
- Nephrology
- Pathology [ ** ](1)
- Physical Medicine
- Pulmonary
- Radiology
- Radiation Oncology
- Surgeon
Outpatient Diagnostic Services
(including, but not limited to, those
listed below)
- Angiograms
- Cat Scan
- 2 D Echo
- EEG
- EKG
- EMG
- ENG
- MRI
- Treadmills
- Ultrasound
Physical Therapy
- Inpatient
- Outpatient
Physician Visits
- To Hospital
- To S.N.F.
- To Patients Home
Physician Office Visits/Consultations
Podiatry Services (requires P.M.G. referral)
Pregnancy
- Professional Component
- Facility Component
Prosthetic Devices
- Inpatient
- Outpatient
(1) All references to division of responsibility have been deleted.
9
DIVISION OF FINANCIAL RESPONSIBILITY EXHIBIT 2
CALIFORNIA
Secure Horizons Shared Risk Agreement
(IPA Capitated, Hospital Incentive Program w/PacifiCare)
IPA SANTA ▇▇▇-TUSTIN PHYSICIANS MEDICAL GROUP, INC.
Responsible Party
-------------------------------
List of Benefits - (In area) IPA PacifiCare PacifiCare
---------------- --------- HIP 100%
Radiation Therapy
- Facility Component (Inpatient)
- Facility Component (Outpatient)
- Professional Component
Radiology Services
- Outpatient
- Inpatient
- O.P. Surgery
Reconstructive Surgery
- Facility Component
- Professional Component
- Prosthetics
Refractions
Rehabilitation (Short Term)
(e.g.: P.T., O.T., Speech, Cardiac Therapy)
- Inpatient Facility Component [ ** ](1)
- Inpatient Professional Component
- Outpatient Facility Component
- Outpatient Professional Component
Skilled Nursing Facility
Special Services - Medical
Specialist Consultations
Surgical Supplies
- Inpatient
- Outpatient Facility
- Outpatient IPA
TMJ
- Dental Treatment
- Diagnosis and Medically Necessary
Correction
- Inpatient Facility Component
Transfusions
- From Blood Bank
- Autologous Blood Donation
Tissue Plasminogen Activator (TPA)
Vision Screening
Vision Care
- Implanted Lenses (cataract surgery)
- Lenses and Frames incident to
cataract surgery
- Non-cataract Related Lenses and Frames
- Medically necessary care
- Refractions
(1) All references to division of responsibility have been deleted.
10
