EXHIBIT 10.55
Note: Certain portions of this Exhibit have been omitted and filed separately
with the Securities and Exchange Commission pursuant to a Request
for Confidential Treatment.
MEDICARE NETWORK MANAGEMENT AGREEMENT
-------------------------------------
THIS AGREEMENT is entered into by and between Doctors Health,
Inc., a Maryland corporation ("Doctors Health"), and NYLCare Health Plans of the
Mid-Atlantic, Inc., a Maryland corporation licensed to operate as a health
maintenance organization ("NYLCare Mid-Atlantic") on October 1, 1997 (the
"Signing Date"), to be effective as of the Effective Date.
WHEREAS, NYLCare Mid-Atlantic is a licensed HMO authorized to
market the NYLCare Mid-Atlantic medicare risk product known as NYLCare 65 in the
State of Maryland, the Commonwealth of Virginia, and in the District of
Columbia;
WHEREAS, NYLCare Mid-Atlantic arranges for the provision of
certain health services to persons enrolled in NYLCare 65 by contracting
directly, or through intermediaries, with physicians, hospitals, and other
health care practitioners and entities (the "NYLCare Mid-Atlantic Network");
WHEREAS, NYLCare Mid-Atlantic has concluded that it is
necessary, desirable, and convenient in the operation and administration of
NYLCare 65 to enter into an agreement for Medicare Network Management to provide
certain management services to the NYLCare Mid-Atlantic Network;
WHEREAS, NYLCare Mid-Atlantic has, prior to the Effective
Date, entered into an "Administrative Service Provider Contract for Medicare
Global Services" (the "Doctors Health Risk Contract") with Doctors Health under
which Doctors Health arranges to provide medical services to Enrollees who
choose or are assigned to Doctors Health primary care physicians;
WHEREAS, Doctors Health has the medical management and
demonstrated business expertise to perform the role of Medicare Network Manager
as set forth herein.
NOW THEREFORE, in consideration of the mutual promises herein,
NYLCare Mid-Atlantic and Doctors Health agree as follows:
1.0 DEFINITIONS
-----------
As used in this Agreement, each of the following terms shall
have the meaning set forth below:
1.1 Adjusted Average Per Capita Cost (AAPCC) means the methodology
used to develop the premium rate paid to health maintenance
organizations by the Federal government for Medicare
recipients in a given geographic region.
1.2 Affiliate means a corporation or other legal entity related by
common ownership, management, or control.
1.3 Agreement means this Agreement.
1.4 Capitated Services means those Covered Services which are
provided or arranged by Participating Providers in exchange
for a fixed monthly payment per Enrollee.
1.5 Case Management means a program developed and administered by
Doctors Health that provides Participating Physicians with the
skills of registered nurses and licensed clinical social
workers (collectively a "Case Manager") necessary to assist in
the coordination of the care and services required by Members
with catastrophic and/or chronic illnesses or injuries.
Through this program, the Case Manager works in conjunction
with the Physician, Member and Member's family to identify
healthcare needs, develop a plan of care, establish realistic
treatment goals, coordinate and monitor necessary resources,
and evaluate treatment progress.
1.6 Copayment means a fixed amount that an Enrollee is required to
pay for any one of certain Covered Services pursuant to the
Health Plan.
1.7 Covered Services means those health care services:
(a) for which benefits are provided pursuant to
the terms of the NYLCare 65 Medicare Health
Plan; and
(b) which are Medically Necessary.
1.8 Data Bank means the National Practitioner Data Bank.
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1.9 Data Management means a service developed and administered by
Doctors Health that coordinates the receipt and maintenance of
payor eligibility and health benefit plan information and
coordinates and integrates a variety of data necessary to
yield reports reflecting the utilization, cost and quality
performance of the Doctors Health Provider Network.
1.10 Deductible means the amount that an Enrollee must pay for
Covered Services per specified period in accordance with the
Enrollee's Health Plan before benefits will be paid.
1.11 Doctors Health means Doctors Health, Inc., a company engaged
in the managed care and physician practice management
business.
1.12 Doctors Health Enrollee means those Enrollees with respect to
whom Doctors Health receives a capitation payment under the
Doctors Health Risk Contract or are assigned to any Doctors
Health Physician or NYLCare Mid-Atlantic Physician within the
Doctors Health Service Area who is not a Primary Care
Physician affiliated with Inova in the Virginia market.
1.13 Doctors Health Network means the network of Participating
Providers under the Doctors Health Risk Contract.
1.14 Doctors Health Physicians means those primary care and
specialist physicians referred to in the Doctors Health Risk
Contract.
1.15 Doctors Health Repricing Group means the Doctors Health
employees assigned to and physically located at the NYLCare
Mid-Atlantic administrative offices and who perform the
functions described in Section 3.4.2(3) and (4) of this
Agreement.
1.16 Doctors Health Risk Contract means the Administrative Service
Provider Contract for Medicare Global Risk Services in effect
between NYLCare Mid-Atlantic and Doctors Health, under which
Doctors Health arranges to provide medical services to
Enrollees who choose or are assigned to Doctors Health Primary
Care Physicians, a copy of which is attached as Exhibit 1 to
this Agreement and incorporated by reference.
1.17 Doctors Health Service Area means all Maryland counties,
except for Prince George's county and all Virginia counties
and cities.
1.18 Effective Date means the Effective Date of this Agreement,
which shall be October 1, 1997.
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1.19 Emergency Services means:
(a) inpatient or outpatient Covered Services that are
needed immediately due to an injury or sudden illness
and which may be rendered by a Participating Provider
or, when the time required to reach a Participating
Provider would mean permanent damage to the
Enrollee's health, a non-Participating Provider; or
(b) those Covered Services defined to be Emergency
Services by applicable statutes or regulations.
1.20 Enrollee or Member means a person who is eligible for
coverage, is enrolled in NYLCare 65 because the person is
eligible for benefits under Title XIII of the Social Security
Act, and is covered under a Medicare risk contract between
NYLCare Mid-Atlantic and HCFA to provide services to persons
receiving benefits.
1.21 HCFA means the Health Care Financing Administration.
1.22 HMO Laws means collectively, the federal Health Maintenance
Organization Act of 1973 (42 U.S.C. Sec. 300e, et seq.) and
applicable regulations thereunder; the Employee Retirement
Income Security Act (29 U.S.C. Sec. 1001, et seq.) and
applicable regulations thereunder, and applicable state
statutory law, and the applicable regulations thereunder,
as amended or promulgated from time to time.
1.23 Health Plan means the NYLCare 65 Benefit Plan.
1.24 Initial Term means the first thirty-six (36) months of the
Agreement.
1.25 Inova means Inova Integrated Services, Inova Health System,
and its two limited liability companies, Premier Health
Services, LLC and United Health Services, LLC.
1.26 Medical Management means a comprehensive program developed and
administered by Doctors Health to facilitate the delivery of
the highest quality, most appropriate care in a cost effective
manner. The components of Medical Management include Referral
Management, Utilization Management and Case Management.
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1.27 Medically Necessary means that the service:
(a) is required for the diagnosis, treatment, or
prevention of an illness or injury, or a medical
condition such as pregnancy;
(b) could not be omitted without adversely affecting
the Enrollee's condition;
(c) is generally accepted as safe and effective
treatment under standard medical practice in the
community where the service is rendered;
(d) is provided in the most cost-efficient manner
that is consistent with an appropriate level of care;
and
(e) is not primarily for the convenience of the
Member or Provider.
1.28 Membership Agreement means the Member's Group or Individual
Service Agreement/Certificate of Coverage, Schedule of
Benefits and any supplemental benefit riders, or comparable
contractual documents describing the scope and conditions of
coverage.
1.29 NYLCare Mid-Atlantic Network means the existing network of
Participating Providers under participation agreements with
NYLCare Mid-Atlantic.
1.30 NYLCare Mid-Atlantic Physicians means those primary care and
specialist physicians who will be managed by Doctors Health
under this Agreement and who have entered into a participation
agreement with NYLCare Mid-Atlantic, other than those in the
District of Columbia and Prince George's County, Maryland, to
provide health care services to NYLCare 65 Enrollees.
1.31 Network Management Services means those services provided by
Doctors Health to NYLCare Mid-Atlantic with respect to Doctors
Health Enrollees as set forth in Section 2.4 of this
Agreement.
1.32 Out-of-Area Urgent Services means services that:
(a) are needed urgently by an Enrollee while he or
she is outside the Service Area, the need for which
could not reasonably have been anticipated before the
Enrollee left the Service Area; and
(b) cannot safely be postponed until the Enrollee can
return to the Service Area to obtain care from or
through his or her Participating ▇▇▇.
▇
▇▇▇-▇▇-▇▇▇▇ ▇▇▇▇▇▇ Services do not include services provided
by non-Participating Providers after the point at which the
Enrollee could safely be transferred to the care of a
Participating Provider.
1.33 Outcomes Measurement means the outcomes measurement program
provided by Doctors Health for outcomes measurement
activities.
1.34 Participating Hospital means a hospital which has entered into
an agreement with Doctors Health or with NYLCare Mid-Atlantic
to provide or arrange for the provision of Covered Services to
Enrollees in the Doctors Health Service Area.
1.35 Participating Physician means a physician or a group of
physicians who has entered into an agreement with Doctors
Health or with NYLCare Mid-Atlantic to provide or arrange for
the provision of Covered Services to Enrollees in the Doctors
Health Service Area. Participating Physicians include
Participating Primary Care Physicians and Participating
Specialist Physicians.
1.36 Participating Primary Care Physician ("PCP") means a
Participating Physician:
(a) whose practice is primarily family medicine,
internal medicine, or general pediatrics, or who is
otherwise designated as a PCP by Doctors Health or
NYLCare Mid-Atlantic; and
(b) who has agreed to provide primary care services
and to coordinate and manage certain Covered Services
for Enrollees who have selected or been assigned to
such Participating Physician.
1.37 Participating Provider means a Provider who has entered into
an agreement with Doctors Health or with NYLCare Mid-Atlantic
regarding, among other things, providing or arranging for the
provision of Covered Services to Enrollees. Participating
Providers include, without limitation, Participating
Hospitals, Participating Physicians, and ancillary
practitioners and facilities.
1.38 Participating Specialist means a Participating Physician who
has been credentialed by NYLCare as a Specialist Physician in
one or more designated medical specialties.
1.39 Parties means Doctors Health and NYLCare Mid-Atlantic.
1.40 Party means either Doctors Health or NYLCare Mid-Atlantic.
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1.41 Payor means an employer, insurer, managed care organization,
labor union, state or federal agency, trust, or other person
or entity which has agreed to be responsible for funding
benefit payments, or otherwise paying, for Covered Services
provided to Enrollees under the terms of a Health Plan.
NYLCare Mid-Atlantic is the applicable Payor for NYLCare 65.
1.42 Policies and Procedures means all of NYLCare Mid-Atlantic's
policies, procedures, and rules, including but not limited to
the Provider Manual, as revised and amended from time to time,
but as it relates to the Health Plan or adversely affects
Doctors Health, only with the prior written consent of Doctors
Health.
1.43 Premium means the applicable AAPCC adjusted annually by HCFA,
plus any subscriber or employer premiums.
1.44 Program Requirements means the rules and procedures that
establish conditions to be followed by Participating Providers
with respect to NYLCare 65.
1.45 Proper Referral means a prior written authorization, issued by
a Participating PCP in accordance with Doctors Health's
policies and procedure for the Enrollee to receive benefits
for a particular Covered Service from a particular provider
within a specified time frame. The Participating PCP shall
make Proper Referrals only to Participating Specialists,
Participating Hospitals, and other Participating Providers as
pre-certified by Doctors Health and in accordance with all
Doctors Health's and NYLCare Mid-Atlantic's applicable
policies and procedures.
1.46 Provider means a duly licensed or certified health
care professional or health care facility.
1.47 Provider Manual means the compilation of information regarding
NYLCare Mid-Atlantic, other Payors, Health Plans, and Policies
and Procedures regarding, without limitation, credentialing,
utilization management and review, quality management, case
management, enrollee grievance procedures, provider appeals,
billing, and referrals as revised and amended from time to
time, but as it relates to the Health Plan or adversely
affects Doctors Health, only with the prior written consent of
Doctors Health.
1.48 Provider Network means the combined NYLCare Mid-Atlantic
Network and Doctors Health Network of Participating Providers
who together provide Covered Services to Enrollees in the
Doctors Health Service Area.
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1.49 Quality Management means the processes established and
operated by Doctors Health or its designee relating to the
quality of Covered Services.
1.50 Referral Management means a process developed and administered
by Doctors Health that provides for the maintenance of
referral directories; authorization of referrals; clinical
review of referrals for appropriateness and tracking and
reporting of referral patterns.
1.51 Utilization Management or Utilization Review means a function
performed by Doctors Health to review and approve whether the
services provided to or for Members are Covered Services and
medically necessary and/or appropriate under the Health Plan.
1.52 Utilization Management Program means the utilization
management and review program designed and administered by
Doctors Health or its agents for the determination of the
medical necessity of medical services provided to Members.
2.0 DOCTORS HEALTH RESPONSIBILITIES
2.1 Network Management. Doctors Health shall, with respect to all
Participating Providers rendering services to Doctors Health
Enrollees, perform all those delegated Network Management
Services as set forth in this Article 2 that are reasonably
necessary for the proper, efficient, and exclusive operation
of the Provider Network by Doctors Health. Such services shall
be rendered to all Doctors Health Providers and to all other
Participating Providers within the Doctors Health Service
Area, and shall be performed in accordance with applicable law
and regulation, accepted standards in the industry, and the
reasonable exercise of Doctors Health's judgment.
2.2 Professional Liability and Other Insurance. Doctors Health, at
its cost and expense, shall procure and maintain such policies
of general liability and professional liability insurance and
other insurance as shall be necessary to insure Doctors Health
and its employees against any claim or claims for damages
arising by reason of personal injuries or death occasioned
directly or indirectly in connection with the performance of
any service by Doctors Health, the use of any property and
facilities or equipment provided by Doctors Health, and the
activities performed by Doctors Health in connection with this
Agreement.
2.3 General Responsibilities.
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(a) Doctors Health shall not act in any manner that
would prevent NYLCare Mid-Atlantic from efficiently
performing its responsibilities under this Agreement
in a business-like manner.
(b) Doctors Health shall coordinate with NYLCare
Mid-Atlantic all press releases, public statements
and other distributed literature, letters, notices or
marketing materials pertaining to the relationship
and this Agreement.
2.4 Specific Responsibilities. Doctors Health shall, with respect
to all Doctors Health Enrollees, provide those services to
Doctors Health Providers and other Participating Providers in
the Doctors Health Service Area that Doctors Health determines
to be reasonably necessary for the exclusive management of the
Provider Network for the Health Plan, including quality
assurance, utilization management and review, finance,
management, information systems management, credentialing, and
other related services. Except to the extent necessary to
discharge its supervisory responsibilities under applicable
laws and regulations, NYLCare Mid-Atlantic hereby delegates to
Doctors Health, as its exclusive Medicare Network Manager for
the Doctors Health Service Area, the complete authority to
determine, in its reasonable discretion, the form, scope, and
manner of implementation of the Network Management Services to
Doctors Health Providers and other Participating Providers in
the Doctors Health Service Area. Within the scope of its
delegated authority, Doctors Health shall, to the extent
required by applicable law and regulation, or to the extent
that, in its discretion, it deems such Network Management
Services necessary to effect the purposes of this Agreement:
(a) Establish, implement, and administer a quality
assurance program that determines clinical
effectiveness, patient satisfaction, patient
compliance, accessibility and availability of
services, efficiency and appropriateness of Covered
Services, and continuity of care of Doctors Health
Enrollees.
(b) Establish, implement and administer utilization
management and review programs that provide
prospective, concurrent and retrospective review of
services rendered by NYLCare Mid-Atlantic Physicians
to Doctors Health Enrollees.
(c) Establish, implement, and administer accounting
procedures and controls for the efficient
administration of the Provider Network, including,
but not limited to, auditing, budgeting, cash
management, and systems for the preparation of
appropriate financial reports.
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(d) Establish and maintain bank accounts in the name
of Doctors Health; deposit in such bank accounts all
moneys received from participation in the Health Plan
and make such disbursements from such accounts on
behalf of Participating Providers in such amounts and
at such times as the same are reasonably required and
as is customary for the industry. In connection with
the foregoing, the parties recognize that: (1) as
part of its business Doctors Health may from time to
time be unable to keep Participating Providers' funds
separate from other Doctors Health funds and may
therefore commingle Participating Providers' funds
and accounts with those of Doctors Health and others,
(2) Doctors Health may, under certain arrangements
with Participating Providers, be entitled to pay to
itself management fees and other amounts due and
owing, if any, from such accounts, and (3) Doctors
Health will use all commercially reasonable efforts
to keep Participating Providers' funds separate from
other moneys whenever possible and to the extent
possible, shall separately account and report for all
Participating Providers' funds, including commingled
funds.
(e) Design, implement, and administer such systems,
policies and procedures as it may deem necessary to
discharge its responsibilities related to claims
administration set forth in Section 3.4.
(f) Advance the development of a program for the
coordination of benefits and a subrogation program,
where applicable. Doctors Health shall have the right
to retain for its own account subrogation revenue on
behalf of Participating Providers.
(g) Advance the design and implementation of an
integrated managed care information system, which
provides for patient enrollment, eligibility and
referral management capabilities to service the
Provider Network.
(h) As delegated by NYLCare Mid-Atlantic, implement
credentialing standards and protocols which are
designed to permit inclusion and verify the
professional credentials of Participating Physicians.
(i) Establish, with NYLCare Mid-Atlantic, a
timely system for certification or
verification of Members' eligibility and
process referral requests, in a timely
manner, from Participating Providers in
accordance with the requirements established
in the participation agreements and the
Policies and Procedures. Each referral will
be reviewed, based upon established medical
criteria, to ensure that
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the referral is appropriate under the
applicable Doctors Health requirements
regarding medical necessity and
utilization. Referral authorizations will
be approved, routed to the appropriate
specialty care provider, or denied due to
noncompliance with applicable Doctors
Health requirements.
(j) Design and implement one or more
incentive programs to be allocated to
Participating Providers to reward patient
service, patient satisfaction, compliance
with policies and procedures, and the
practice of cost effective and high quality
medicine. Such incentive programs shall
comply with the Physician Incentive Plan
Rules set forth in 42 U.S.C. Section
1395mm(i)(8), and Doctors Health shall be
responsible for funding any necessary stop
loss insurance.
(k) As required by Section 2.16, assist
NYLCare Mid-Atlantic as necessary in making
capitation payments to Participating
Providers in a timely manner.
(l) Establish and implement community based
education programs designed to educate
Medicare eligible patients regarding the
benefits associated with managed health
care, which programs shall be approved,
co-sponsored, and paid for by NYLCare
Mid-Atlantic.
Each of the foregoing Network Manager Services may be
provided by Doctors Health in whole or in part to any one or
more of Doctors Health Providers or other Participating
Providers in the Doctors Health Service Area, in Doctors
Health's sole discretion.
2.5 Accounting and Administrative Records. Doctors Health shall,
and shall cause each Participating Provider to, maintain
accurate accounting and administrative books and records
consistent with the Policies and Procedures for all Covered
Services rendered to Members for a minimum of six (6) years.
Doctors Health shall provide to NYLCare Mid-Atlantic, on a
monthly basis, a written report that identifies all payments
made and to be made by Doctors Health to Participating
Providers, if any. Annual financial statements shall be
prepared by Doctors Health in accordance with generally
accepted accounting principles, and shall be provided to
NYLCare Mid-Atlantic on an annual basis. NYLCare Mid-Atlantic
and its agents and representatives, as well as representatives
of the federal Department of Health and Human Services and
state agencies having jurisdiction over the subject matter of
this Agreement or the Parties, shall have the right upon
11
reasonable prior notice to inspect, audit, and copy at
mutually agreed upon times all such accounting and
administrative books and records of Doctors Health and each
Participating Provider.
2.6 Letter of Credit. Doctors Health will, within thirty (30) days
of the Effective Date, provide NYLCare with an irrevocable
standby Letter of Credit from a financial institution
reasonably acceptable to NYLCare Mid-Atlantic. This Letter of
Credit is intended by the parties to satisfy Doctors Health's
financial responsibility to Participating Providers for
Covered Services rendered to Members. Such letter of credit
shall comply with applicable state law and the Policies and
Procedures. The parties agree that Doctors Health has
demonstrated to NYLCare Mid-Atlantic that the letter of credit
required under this Section is sufficient to satisfy Doctors
Health's obligations to Participating Providers for Covered
Services rendered to Members.
(a) The Letter of Credit is intended by the
parties to serve solely as security for the
payment of claims to Participating
Providers. NYLCare Mid-Atlantic shall not be
permitted to draw on the Letter of Credit
except to pay any balance due under Section
3.4.3 following the expiration of the
applicable sixty (60) day waiting period.
(b) The parties acknowledge that the
provisions of this Section 2.6 and Section
2.5 above are intended to comply with the
terms and conditions of the Annotated Code
of Maryland, Health General, Section
19-713.2 and any of its implementing
regulations.
3.0 NYLCARE MID-ATLANTIC RESPONSIBILITIES
3.1 Delegation of Medical Management. In accordance with standards
set forth by the National Committee on Quality Assurance
("NCQA"), NYLCare Mid-Atlantic hereby delegates, on an
exclusive basis, the Medical Management for the Provider
Network to Doctors Health with respect to all Covered Services
rendered to a Doctors Health Enrollee; provided, however, that
NYLCare Mid-Atlantic shall have oversight of such delegated
responsibility as may be required in accordance with
regulatory requirements and in accordance with the standards
set forth by NCQA.
(a) Doctors Health shall be the exclusive contractor
to NYLCare Mid-Atlantic for the services to be
performed under this Agreement to Doctors Health
Providers and other Participating Providers in the
Doctors Health Service Area. NYLCare Mid-Atlantic,
for the Term hereof, hereby
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appoints Doctors Health, and Doctors Health hereby
accepts such appointment, as NYLCare Mid-Atlantic's
exclusive Medicare Network Manager to act on behalf
of NYLCare Mid-Atlantic with regard to the duties
herein delegated hereunder.
(b) Doctors Health shall have a right of first
refusal to the exclusive Medicare Network Manager for
Enrollees: (i) in the District of Columbia; (ii) in
Prince George's County, Maryland; or (iii) who have
selected or are assigned to an Inova Primary Care
Physician. NYLCare Mid-Atlantic shall not enter into
a network management arrangement which includes
responsibility for Enrollees in the District of
Columbia or Prince George's County, Maryland, or for
Enrollees who have selected or are assigned to an
Inova Primary Care Physician with any third party,
without first determining whether Doctors Health is
willing or able to assume such network management
responsibilities upon terms substantially similar to
those agreed to by any responsible third party.
3.2 Scope of Delegation. NYLCare Mid-Atlantic hereby delegates to
Doctors Health all of the specific responsibilities set out in
Section 2.4 as they relate to Doctors Health Providers, other
Participating Providers in the Doctors Health Service Area,
Covered Services otherwise rendered to Doctors Health
Enrollees, its rights under its Primary Care Physician
Provider Contracts, Specialty Network Services Agreements, and
Hospital Provider Agreements in effect within the Doctors
Health Service Area, except for the right to terminate such
contracts or agreements, all of the rights related to Doctors
Health participation in claims administration set forth in
Section 3.4; and all other rights and responsibilities
necessary to carry out the purposes of this Agreement.
3.3 Retained Responsibilities. NYLCare Mid-Atlantic will retain
responsibility for contracting and administrative functions
which are not delegated to Doctors Health under this
Agreement. The contracting and administrative functions
retained by NYLCare Mid-Atlantic include, but are not limited
to:
(a) Serving as a direct resource to enrollees, which
shall include but not limited to, administering
NYLCare Mid-Atlantic's standard Medicare appeals and
grievances process;
(b) Generating Participating Provider directories,
and providing updates or amendments as and when
requested by Doctors Health;
(c) Administering participation agreements for the
NYLCare Mid-Atlantic Physicians;
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(d) Defining standards for professional liability
insurance and credentialing;
(e) Approving the credentialing of all Participating
Providers in accordance with NCQA standards;
(f) Generating Provider Manuals, which shall
designate Doctors Health as the exclusive Medicare
Network Manager; and
(g) Claims Administration subject to the terms and
conditions of Section 3.4 below.
3.4 Claims Administration.
3.4.1 Claims Payments. NYLCare Mid-Atlantic is solely
responsible for making payments for any and all
claims for non-capitated Covered Services in
cooperation with Doctors Health and otherwise in
accordance with the procedures in this Section 3.4.
Claims payments to Participating Providers for
non-capitated Covered Services, processed and
approved strictly in accordance with this Section
3.4, shall be made by NYLCare Mid-Atlantic and then
deducted from the compensation due Doctors Health
under Section 6.1 of this Agreement subject to all of
the conditions set forth in subparagraph 3.4.3 below.
3.4.2 Claims Submission, Review and Disposition.
(1) Participating Providers shall submit
claims to NYLCare Mid-Atlantic for
non-capitated Covered Services rendered to
Members. Each Participating Provider shall
submit such claims in accordance with the
Policies and Procedures.
(2) NYLCare Mid-Atlantic shall review all
claims for non-capitated Covered Services to
Enrollees by Participating Providers and
make an initial determination:
(a) whether the Enrollee is eligible
under the Health Plan;
(b) whether the Participating
Provider provided the Enrollee
with a Covered Service;
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(c) whether the Covered Service was
authorized by Doctors Health in
accordance with Doctors Health
policies and procedures in effect,
and provided to NYLCare
Mid-Atlantic, and as amended from
time to time in the sole discretion
of Doctors Health (the "Doctors
Health Policies and Procedures");
and
(d) whether, for bundled claims
submitted by hospitals or other
institutional providers, the Covered
Service was authorized by Doctors
Health in the form it was submitted
and, if not, to determine the
correct manner in which the claim is
to be unbundled or deoptimized.
(3) NYLCare Mid-Atlantic shall give
preliminary approval or denial to a claim
processed under Section 3.4.2(2) above
within ten (10) calendar days of receipt of
the claim. NYLCare Mid-Atlantic shall then
transfer all claims which receive their
preliminary approval directly to the Doctors
Health Repricing Group. Upon receipt of a
transferred claim, the Doctors Health
Repricing Group shall then have ten (10)
calendar days to make the following
determinations:
(a) whether the Covered Service was
authorized by Doctors Health in
accordance with the Doctors Health
Policies and Procedures;
(b) if the claim is a bundled claim,
whether the claim has been unbundled
or deoptimized in accordance with
the Doctors Health Policies and
Procedures and, if not, the correct
manner in which the claim is to be
unbundled or deoptimized; and
(c) setting the price for the
Covered Service as the lowest of the
NYLCare Mid-Atlantic rate, the
Medicare rate, or the Doctors Health
rate.
(4) Doctors Health shall, once it has made
the determinations set forth in Section
3.4.2(3)(a)-(c) above, transfer the claim
back to NYLCare Mid-Atlantic with one of the
following designated actions which shall be
followed by NYLCare Mid-Atlantic:
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(a) The claim is approved for
payment at the price set in
Section 3.4.2(3)(c) above for a
Participating Provider;
(b) The claim is denied because the
Covered Service was not authorized
by Doctors Health in accordance with
the Doctors Health Policies and
Procedures; or
(c) The claim is approved in part at
the price set in Section 3.4.2(3)(c)
and denied in part in accordance
with the unbundling and deoptimizing
rules set forth in the Doctors
Health Policies and Procedures, and
applied to the submitted claim.
3.4.3 Payment of Approved Claims. NYLCare
Mid-Atlantic shall make timely payment for
all approved claims in the amount
approved by Doctors Health, in
accordance with the provisions of Section
3.4.2(4) above, and in accordance with
applicable law and regulation. The total
payments on such claims made to
Participating Providers by NYLCare
Mid-Atlantic in any calendar month shall be
deducted from the compensation due to be
paid to Doctors Health under Section 6.1 on
the tenth (10th) day of the following
month. In the event that the total amount
for claims paid by NYLCare Mid-Atlantic
exceeds the total compensation due to be
paid to Doctors Health for that month,
then NYLCare Mid-Atlantic shall invoice
Doctors Health for the balance due and
Doctors Health shall pay NYLCare
Mid-Atlantic within sixty (60) days of the
date of receipt of the invoice.
3.4.4 Special Representations of NYLCare
Mid-Atlantic. NYLCare Mid-Atlantic
represents that it will perform all of
its obligations related to claims
administration in a commercially
reasonable manner, strictly in accordance
with the terms and conditions of this
Section 3.4, and strictly in accordance with
the applicable standards in the health
care industry for the timely adjudication
and payment of claims. Any penalties,
including interest payments required by
applicable law, associated with the failure
to pay claims in a timely fashion and
within the periods required by applicable
law, shall be borne by NYLCare Mid-Atlantic
and not Doctors Health. At any time during
the Initial Term of this Agreement, when
conditions warrant, Doctors Health may
make one or more of the following
determinations, using its discretion
reasonably applied, that NYLCare
Mid-Atlantic has:
16
(a) failed to demonstrate the
ability or the capacity to perform
all of its obligations related to
claims administration in accordance
with the terms and conditions of
this Agreement; or
(b) failed to demonstrate the
ability or the capacity to perform
all of its obligations related to
the timely adjudication and payment
of claims in the manner required or
contemplated by applicable law or
otherwise in a commercially
reasonable manner; or
(c) failed to demonstrate the
ability or the capacity to perform
all of its obligations related to
the timely adjudication and payment
of claims in accordance with the
applicable standards in the health
care industry.
3.4.5 Special Rights of Doctors Health. In the
event that Doctors Health makes one or more
of the determinations set out in Section
3.4.4(a)(b) or (c) above, and NYLCare
Mid-Atlantic, within ten (10) days of
receiving written notice of the
determination from Doctors Health,
agrees and does not dispute such
determination, then NYLCare Mid-Atlantic
shall, within sixty (60) days of such date
assign the functions of claims
administration to Doctors Health under a
Network Management Agreement. If, within
ten (10) days of receiving written notice
of the determination NYLCare Mid-Atlantic
disputes the determination by Doctors
Health, then the dispute shall be resolved
in accordance with the provisions of
Section 6.0 below. If a majority of the
arbitrators decide that Doctors Health has
made a correct determination, then a final
and binding decision to that effect shall
be issued under Section 8.6(c). Within
sixty (60) days of the issuance of the
final and binding decision by AAA, NYLCare
Mid-Atlantic shall assign the function of
claims administration to Doctors Health
under a Network Management Agreement, and
the parties thereafter agree to use their
good faith best efforts to amend this
Agreement to implement the necessary
process for the orderly and efficient
assignment of Claims Administration to
Doctors Health.
3.5 Product Description. NYLCare Mid-Atlantic shall retain
responsibility for the Product Description, but any changes to
the Product Description may not be made without the prior
approval of Doctors Health, which shall not be unreasonably
17
withheld. In the event that any change in the Product
Description increases the financial risk to Doctors Health
under this Agreement, then NYLCare Mid-Atlantic shall pay
additional compensation to Doctors Health in an amount that is
reasonably established by the parties.
3.6 Amendments to Participation Agreements. On or before November
1, 1997, NYLCare Mid-Atlantic shall notify, in writing, all
[Doctors Health Physicians and all] NYLCare Mid-Atlantic
Physicians in the Doctors Health Service Area or otherwise
rendering Covered Services to any Doctors Health Enrollee that
certain amendments will be made to their participation
agreements effective January 1, 1998. The parties agree to
cooperate regarding and mutually agree upon any additional
amendments requested by Doctors Health. [This notice will be
issued jointly by Doctors Health and NYLCare Mid-Atlantic.]
The notice shall include at least the following:
(a) All prior incentive and/or bonus programs,
including the Incentive Compensation Plan pertaining
to Medicare Members, made effective on January 1,
1997, are, unless Doctors Health has informed NYLCare
to the contrary, terminated.
(b) In the event that a Participating Provider has a
participation agreement with both NYLCare
Mid-Atlantic and Doctors Health, the Participating
Provider will agree to accept payment according to
the lower of the NYLCare Mid-Atlantic fee schedule,
the Medicare fee schedule, or the Doctors Health fee
schedule;
(c) The Participating Providers will provide services
in accordance with a revised incentive/bonus
arrangement that may be (but need not be) established
by Doctors Health, and said compensation arrangement
will, when and if established, with respect to
physicians or physician groups, comply with the
Physician Incentive Plan Rules as set forth in 42
U.S.C. Section 1395 mm(i)(8);
(d) The Participating Providers will participate in
all continuing education and marketing programs
arranged by Doctors Health;
(e) The Participating Primary Care Providers will
cooperate with Doctors Health and NYLCare in an
effort to educate their Medicare eligible patients
regarding the benefits of Medicare HMOs (including
NYLCare Mid-Atlantic), and will assist Doctors Health
and NYLCare Mid-Atlantic (at no cost or inconvenience
to the Participating Primary
18
Care Providers) in preparing mailings and other
correspondence to such Participating Primary Care
Provider's Medicare eligible patients.
(f) The Participating Providers will participate in
and be bound by the policies and procedures adopted
by Doctors Health to implement the terms and
conditions of this Agreement.
(g) Doctors Health, as the Medicare Network Manager,
will have the exclusive right to limit, direct or
focus referrals within the Provider Network, to
select Participating Providers, and to preauthorize
and pre-certify all or any portion of all referrals;
(h) The sanctioning process listed on page VI-4 of
the Manual shall be applied to all Participating
Providers in the NYLCare Mid-Atlantic Network, and
will constitute any and all required notice and cure
for purposes of the termination provisions of their
participation agreements. Once the panel, which shall
include at least one Doctors Health representative in
its membership, has determined at the final step of
the sanctioning process that the Participating
Provider has failed to comply with the policies and
procedures regarding referrals, pre-authorization and
pre-certification thereof, the participation
agreement will be terminated and such termination
will not be subject to arbitration.
3.7 Enforcement of Existing Agreements. NYLCare Mid-Atlantic
recognizes that Doctors Health has assumed significant
financial risks in managing the Provider Network, and that
Doctors Health will be relying on NYLCare Mid-Atlantic to
enforce various rights and obligations under participation
agreements with NYLCare Mid-Atlantic Physicians. NYLCare
Mid-Atlantic represents and warrants that it has entered into
such contractual or other legally binding arrangements as are
necessary to ensure that the provisions of this Agreement
creating obligations in the NYLCare Mid-Atlantic Physicians
are enforceable by NYLCare Mid-Atlantic against such NYLCare
Mid-Atlantic Physicians.
(a) NYLCare Mid-Atlantic agrees to cooperate in good
faith to enforce compliance by the NYLCare
Mid-Atlantic Network with Doctors Health's
utilization standards and other medical and care
management tools and procedures, including the
referral of Doctors Health Enrollees to the Doctors
Health Network for Covered Services, in order to
provide the highest quality care at the best possible
price in the most appropriate setting. The extent of
NYLCare's cooperation shall include, but not be
limited to, the termination of any NYLCare
Mid-Atlantic Physician's rights to continue providing
Covered Services in the Health Plan, upon
19
receipt of a written request from Doctors Health.
The written request shall state that the NYLCare
Mid-Atlantic physician (or group or intermediary
through which such physician is a Participating
Provider) has failed to cooperate and abide by
Doctors Health's programs and procedures, has
breached the provisions of the participation
agreement with NYLCare Mid-Atlantic, or has
otherwise failed or refused to take, action that
materially and adversely effects the reputation or
financial success of Doctors Health, the health
or well being of any patient, or the interests of
other Participating Providers.
(b) Upon request by NYLCare Mid-Atlantic, Doctors
Health shall provide NYLCare Mid-Atlantic with
written evidence of any alleged failure, material
breach, act or omission serving as cause for the
termination of a NYLCare Mid-Atlantic Physician's
participation agreement, and will at all times
cooperate in good faith in all efforts to afford any
non-compliant NYLCare Mid-Atlantic Physician or
Participating Provider with a reasonable opportunity
to cure any default or failure to perform.
(c) Any termination at the request of Doctors Health
shall, where possible, be made "for cause" pursuant
to Section 13.2 of NYLCare Mid-Atlantic's standard
Primary Care Physician Provider Contract, or pursuant
to Section 16.2 of its standard Specialty Network
Services Agreement, or pursuant to Section 15.2 of
its standard Hospital Provider Agreement, or such
other provisions permitting termination for cause,
and if such a "for cause" termination cannot in good
faith be made by NYLCare Mid-Atlantic, the
termination will be made under Section 13.3 of
NYLCare's standard participation agreement, or such
other provisions permitting termination without cause
as may be applicable.
3.8 Marketing Activities. NYLCare Mid-Atlantic shall
aggressively and in good faith use its best efforts to engage
in the following marketing activities:
(a) Provide to Participating Providers Health Plan
brochures for distribution at a health fair or in
their offices. The brochures shall not include an
application for enrollment in the Health Plan.
(b) Co-sponsor events such as open houses or health
fairs with Doctors Health.
20
(c) Market and advertise by television, radio, direct
mail, testimonials, posters, fliers, and print
advertisements.
(d) Commit the level of staff and financial resources
necessary to successfully expand the membership in
NYLCare 65 in the Doctors Health Service Area such
that the level of effort expended by NYLCare
Mid-Atlantic is at least equal to the level of
effort by competitors of the NYLCare 65 product
in the Doctors Health Service Area.
(e) Implement such other marketing strategies,
consistent with applicable law and regulation, which
are calculated to expand the membership in NYLCare 65
in the Doctors Health Service Area.
3.9 Marketing Reports. NYLCare Mid-Atlantic shall provide
quarterly reports to Doctors Health, within thirty (30) days
following the close of each quarter, with the first such
report due on or before January 30, 1998, which contain the
following information:
(a) the expenditures in the previous quarter for
marketing NYLCare 65 in the Doctors Health Service
Area;
(b) a listing of all of the marketing efforts
employed in the previous quarter which satisfy the
requirements of Section 3.6 (a) through (f) above;
(c) a listing of the number of new Enrollees for the
quarter; and
(d) an overview of the additional marketing efforts
to be employed in the next quarter.
3.10 Public and Governmental Relations. NYLCare Mid-Atlantic shall
be solely responsible for the advertising and promotion,
public relations and governmental requirements relating to
this Agreement, specifically including assuring compliance
with applicable laws and regulations relating to its
organization and operation as an HMO. Such requirements shall
include the satisfaction of all reporting requirements to
State and Federal agencies and organizations insuring the
solvency of the HMO. Doctors Health shall provide NYLCare
Mid-Atlantic will all the necessary information on a timely
basis to meet such requirements and otherwise fully cooperate
in assuring ongoing compliance with operational and reporting
requirements of regulatory agencies. Nothing in this Section
shall prohibit Doctors Health from advertising and promoting
its services to the public.
21
3.11 Integration of Doctors Health's Systems. NYLCare Mid-Atlantic
will cooperate as required by Doctors Health in customizing
all systems, processes, and communications with Participating
Providers and Enrollees to accommodate the integration of
Doctors Health's medical management, claims and network
management functions (as defined and limited by Section 3.4),
with NYLCare Mid-Atlantic's retained administrative functions.
3.12 Designated Fiduciary. NYLCare Mid-Atlantic agrees that its
will remain the designated fiduciary with regard to Medicare
risk enrollees.
3.13 Professional Liability and Other Insurance. NYLCare
Mid-Atlantic, at its cost and expense, shall procure and
maintain such policies of general liability and professional
liability insurance and other insurance as shall be necessary
to insure NYLCare Mid-Atlantic and its employees against any
claim or claims for damages arising by reason of personal
injuries or death occasioned directly or indirectly in
connection with the performance of any service by NYLCare
Mid-Atlantic, the use of any property and facilities or
equipment provided by NYLCare Mid-Atlantic, and the activities
performed by NYLCare Mid-Atlantic in connection with this
Agreement.
22
3.14 Miscellaneous Responsibilities.
(a) NYLCare Mid-Atlantic shall not act in any manner
that would prevent Doctors Health from efficiently
performing its responsibilities under this Agreement
in a business-like manner.
(b) NYLCare Mid-Atlantic shall coordinate with
Doctors Health all press releases, public statements
and other distributed literature, letters, notices or
marketing materials pertaining to the relationship
and this Agreement.
4.0 REPRESENTATIONS AND WARRANTIES
4.1 Authority. Each of the parties represents and warrants that it
has the corporate authority to enter into this Agreement, and
that to the best of its knowledge, no consents or approvals,
other than Board of Director approvals is necessary to enter
into this Agreement.
4.2 Violation of Preexisting Agreements. Each of the parties
represents and warrants that by entering this Agreement they
are not violating any preexisting agreement with a third
party.
4.3 Compliance with Applicable Laws. NYLCare Mid-Atlantic and
Doctors Health shall each comply in all material respects with
all applicable federal, state and local laws, regulations and
restrictions in the conduct of its obligations under this
Agreement and shall carry out its duties under this Agreement
exercising normal and customary business judgment.
4.4 Historical Costs. NYLCare Mid-Atlantic represents and warrants
that the historical pharmacy, institutional, ancillary and
capitated carveout costs set forth on Schedule 4.3 are
accurate in all material respects.
5.0 PHYSICIAN RECRUITMENT
5.1 Doctors Health Physicians. All physicians who are or, at any
time during the term of this Agreement, become affiliated with
Doctors Health or any Doctors Health Affiliate shall be deemed
Doctors Health Physicians, including Primary Care Physicians
whose practices are or become owned by or affiliated with the
Avanti Group, through NYLCare Mid-Atlantic or directly with
Doctors Health, at the Avanti Group's election. Such
physicians shall be deemed to be Doctors Health
23
Physicians regardless of whether the Avanti Group is
controlled by or under common control with Georgetown
University Hospital or the Georgetown Faculty Practice and
regardless of whether the physician is located in the
District of Columbia or Prince Georges County, Maryland.
Once a physician is deemed to be a Doctors Health Physician,
then Doctors Health shall only receive compensation for
Doctors Health Enrollees who choose or are assigned to such
physicians under the Risk Contract attached as Exhibit 1
and not under Section 6.1 of this Agreement.
5.2 Participation in Health Plan. All Doctors Health Primary
Care Physicians will participate in the Health Plan by
December 31, 1997.
5.3 Doctors Health Recruitment. Doctors Health may recruit the
following physicians to become Doctors Health Physicians in
addition to all physicians in the Doctors Health Service Area:
(a) All physicians, including NYLCare Mid-Atlantic
Physicians, including physicians in the District of
Columbia and Prince George's County, Maryland.
(b) Physicians with a previous contractual
relationships with Inova Integrated Services or any
of its related entities.
5.4 NYLCare Mid-Atlantic will transfer a NYLCare Mid-Atlantic
Physician who becomes a Doctors Health Physician effective
within thirty (30) days of notification from Doctors Health or
the NYLCare Mid-Atlantic Physician.
6.0 PAYMENT
6.1 General. On or before the tenth day of each month during the
Term, beginning October 10, 1997, NYLCare Mid-Atlantic will
pay Doctors Health the amount set forth in Attachment B. The
parties acknowledge that Doctors Health receives all of its
compensation for providing Covered Services to Doctors Health
Enrollees who have chosen or have been assigned to a Doctors
Health Physician under the Doctors Health Risk Contract.
6.2 Capitation Payments. Doctors Health will be responsible for
making capitation payments to all NYLCare Mid-Atlantic
Physicians and to all Doctors Health Physicians providing
Covered Services to Doctors Health Service Enrollees.
6.3 Other Administrative Records. Doctors Health shall, and shall
cause each Participating Provider to, maintain accurate
accounting and administrative books
24
and records consistent with the Policies and Procedures
for all Covered Services rendered to Members for a minimum
of six (6) years. Doctors Health shall provide to NYLCare
Mid-Atlantic, on a monthly basis, a written report that
identifies all payments made and to be made by Doctors Health
to Participating Providers, if any. Annual financial
statements shall be prepared by Doctors Health in accordance
with generally accepted accounting principles, and shall
be provided to NYLCare Mid-Atlantic on an annual basis.
NYLCare Mid-Atlantic, Payors, and their agents and
representatives, as well as representatives of the federal
Department of Health and Human Services and state agencies
having jurisdiction over the subject matter of this
Agreement or the Parties, shall have the right upon reasonable
prior notice to inspect, audit, and copy at mutually agreed
upon times all such accounting and administrative books and
records of Doctors Health and each Participating Provider.
6.4 Letter of Credit. Doctors Health will, within thirty (30) days
of the Effective Date, provide NYLCare with an irrevocable
standby Letter of Credit at a financial institution reasonably
acceptable to NYLCare Mid-Atlantic. This Letter of Credit is
intended by the parties to satisfy Doctors Health's
obligations to Participating Providers for Covered Services
rendered to Members. Such letter of credit shall comply with
applicable state law and the Policies and Procedures. NYLCare
Mid-Atlantic acknowledges that the letter of credit required
under this Section is sufficient to satisfy Doctors Health's
obligations to Participating Providers for Covered Services
rendered to Doctors Health Enrollees.
(a) The initial notional amount of the Letter of
Credit will be $*** million dollars. The notional
amount of the Letter of Credit will be increased to
$*** million dollars on the sixtieth (60th) day
following the Effective Date. Thereafter, on each
anniversary of the Effective Date, the notional
amount of the Letter of Credit will be adjusted to be
an amount equal to sixty (60) days of average claims
for the immediately preceding twelve (12) month
period, based on the beginning of the contract year
in question.
(b) The Letter of Credit is intended by the parties
to serve solely as security for the payment of claims
to Participating Providers. NYLCare Mid-Atlantic
shall not be permitted to draw on the Letter of
Credit for any other purpose, and may do so only to
pay the balance due under Section 3.4.3 following the
expiration of the sixty (60) day waiting period.
25
(c) The parties acknowledge and agree that the letter
of credit referred to in this Agreement satisfies in
all respects the obligation of Doctors Health to
provide a letter of credit under Section 3.21 of the
Doctors Health Risk Contract.
(d) Doctors Health must maintain the Letter of Credit
at all times during the Term of this Agreement. In
the event of any termination of this Agreement by
NYLCare Mid-Atlantic for cause, or a termination of
this Agreement by the expiration of the initial term
or any renewal term, the Letter of Credit will remain
in effect for one hundred eighty (180) days following
the termination date.
6.5 Recoupment for Overpayment. If at any time during the term of
this Agreement NYLCare Mid-Atlantic determines and
demonstrates to Doctors Health that it has made an incorrect
overpayment to Doctors Health within one hundred and eighty
(180) days of such payment, NYLCare Mid-Atlantic shall have
the right, after giving Doctors Health thirty (30) days prior
written notice, to recover from Doctors Health the full amount
incorrectly overpaid. Such recovery may be in the form of set
off, withhold of future payments, or demand for repayment.
6.6 Recoupment for Underpayment. If at any time during the term of
this Agreement Doctors Health determines and demonstrates to
NYLCare Mid-Atlantic that it has made an incorrect
underpayment to Doctors Health, then NYLCare Mid-Atlantic
shall remit to Doctors Health said underpayment within thirty
(30) days.
6.7 Recoveries from Third Parties. Recoveries of payments from any
third party by subrogation shall be retained by Doctors
Health, to the extent permitted by regulation.
7.0 TERM AND TERMINATION
7.1 Term of Agreement. This Agreement shall begin on the Effective
Date and, unless otherwise terminated in accordance with the
provisions hereof, shall have an initial term ending on the
third (3rd) anniversary of the Effective Date; provided,
however, that after the initial term ends as provided in this
Section, this Agreement shall continue from year to year
thereafter, unless terminated by a party upon 90 days' prior
written notice delivered to the other party or otherwise in
accordance with the provisions hereof.
26
7.2 Termination for Cause. The parties agree that they will
promptly notify the other in the event of any of the
following, and that upon the occurrence of any such event,
either party may, but shall not be required to, terminate this
Agreement upon ninety (90) days written notice to the other:
(a) Failure to maintain any insurance required under
this Agreement;
(b) Dissolution, termination of existence, insolvency
or business failure of either party, commission of
any act of bankruptcy by, or appointment of a
receiver or other legal representative for any party
of the property of either party;
(c) Assignment for the benefit of creditors or
commencement of any proceeding under and bankruptcy
or insolvency law by or against any party; entry for
an order for relief against either party;
(d) In the event of a liquidating distribution to the
either party's shareholders (or similar event);
(e) Any purported combination, consolidation or
merger of the a party into another entity, in a
transaction where such party is not the surviving
entity under applicable law; provided, however, that
an initial public offering shall not be considered
grounds for termination of this Agreement;
(f) Any sale or issuance of a party's securities that
places a majority of the voting power of such shares
in the control of persons or entities not having such
control on September 30, 1997;
(g) Any sale, exchange, or other disposition of all
or substantially all of the other party's assets;
(h) Any change in a party's upper management
personnel, if such management personnel was
key to the continuation of this Agreement and
the absence of such management personnel would
frustrate the continued provision of the products
and services contemplated by this Agreement;
(i) If a party proposes to act or conducts
itself in such a manner as to directly
compete with the primary business purpose of
non-breaching party;
27
(j) The failure of a party to maintain
licenses or certifications required to
operate in conformity with this Agreement.
(k) A party conducts itself in such a way as
to reflect negatively on the reputation of
the non-breaching party, which shall be
limited to circumstances in which NYLCare
Mid-Atlantic or Doctors Health or any of
their respective officers, directors or
management employees, is found guilty of a
felony, or engages in gross misconduct which
directly results in prohibiting the other
party from participating in the Medicare
program.
(l) The commission or omission of any act or
any conduct or allegation of conduct for
which the a party's license, certification
or accreditation, or right to participate in
the Medicare program, may be subject to
revocation or suspension, whether or not
actually revoked or suspended, or if the
party is otherwise disciplined by any
licensing, regulatory, professional entity,
or any professional organization with
appropriate jurisdiction.
(m) The failure by NYLCare Mid-Atlantic to
make capitation payments net of claims
payments as provided in Attachment B.
7.3 Cure Period. If either party to this Agreement substantially
fails to perform any material duty or obligation imposed upon
it by this Agreement or otherwise is in material breach of
this Agreement, other than an event of default set forth in
Section 7.2, and such default shall continue for a period of
ninety (90) days after written notice thereof specifying the
nature of the default has been given to it by the other party,
(or such longer time if the failure can not be cured within
such 90 days as long as the party in breach has initiated and
is diligently pursuing a cure within the 90 day time period
which is reasonably likely to cure the breach in a
commercially reasonable time frame), the other party may
terminate this Agreement upon ninety (90) days prior written
notice and seek such relief or pecuniary loss or damages
caused by such breaching party, including, without limitation,
actual damages. Failure to make payments by NYLCare
Mid-Atlantic in accordance with this Agreement is grounds for
immediate termination after NYLCare Mid-Atlantic has had
ninety (90) days to cure such default.
7.4 Termination by Agreement. In the event NYLCare Mid-Atlantic
and Doctors Health shall mutually agree in writing, this
Agreement may be terminated effective on the date specified in
such written agreement.
28
7.5 Termination Based on Prospective Regulatory Changes.
Notwithstanding the parties' agreement to modify this
Agreement when necessary because of prospective legal events
as set forth in Section 9.4, if an amendment to this Agreement
is required based on regulatory mandate and such amendment
involves a modification which is substantially burdensome on
either party and which was not contemplated by the burdened
party as of the date of execution of this Agreement, such
burdened party may terminate this Agreement upon ninety (90)
days written notice to the other party without penalty.
7.6 Cross Default. The Doctors Health Risk Contract is hereby
incorporated by reference. In the event of a conflict between
this Agreement and the Doctors Health Risk Contract, except
for Attachment B, this Agreement shall control. In the event
that the Doctors Health Risk Contract expires, is not renewed,
or is terminated by either party for any reason, the parties
agree that this Agreement may be terminated by Doctors Health.
7.7 Procedure Upon Termination. In the event of the termination of
this Agreement by either party for any reason, the
Participating Providers' obligations to follow the policies
and procedures adopted by Doctors Health shall remain in full
force and effect until the end of the term of such contract,
and for a period of ninety (90) days following the date of
termination. During this period, Doctors Health shall assist
NYLCare Mid-Atlantic in effecting an orderly transition of the
Medicare Network Manager functions undertaken by Doctors
Health as follows:
(a) Beginning on the date of receipt of notice of
termination for any reason by either party, Doctors
Health shall, upon written request of NYLCare
Mid-Atlantic, immediately cooperate with NYLCare
Mid-Atlantic in transferring all property of NYLCare
Mid-Atlantic in Doctors Health's possession, and in
arranging for the delivery of information and record
keeping functions to NYLCare Mid-Atlantic or such
entity as is selected by NYLCare Mid-Atlantic to
assume the duties performed by Doctors Health (the
"Designated Entity"), so as to assist NYLCare
Mid-Atlantic in minimizing any interruption in its
operations. Consistent with the usual and customary
industry practices, and subject to applicable vendor
contracts between Doctors Health and any third party,
Doctors Health shall, or shall cause any such third
party to: (a) deliver or cause to be delivered to
NYLCare Mid-Atlantic or the Designated Entity, within
ninety (90) days of the termination date, all
documents, information and material of NYLCare
Mid-Atlantic (including electronic, microfilm and
magnetic media records); and (b) cooperate with
NYLCare Mid-Atlantic in the transfer to NYLCare
Mid-Atlantic or the Designated Entity of all
information and records directly relating to and
necessary to perform the
29
various functions and services undertaken by
Doctors Health under this Agreement in the
operation of NYLCare Mid-Atlantic, including the
planning and execution of such transfer and diagnosis
and correction of errors arising in the course of
such transfers.
(b) All records, data and other information
transferred pursuant to this Section (the
"Transferred Information") shall be furnished to
NYLCare Mid-Atlantic in machine readable form or in
such other format and medium agreed upon by NYLCare
Mid-Atlantic and Doctors Health, which shall be
reasonable and appropriate for the nature of the
specific type of Transferred Information.
(c) Each party shall use its commercially reasonable
best efforts to ensure that the transfer of
Transferred Information and any other property of
NYLCare Mid-Atlantic under this Section shall be
completed no more than ninety (90) days following the
termination date; provided, however, that within the
time period before such completion, Doctors Health
shall use its commercially reasonable efforts to meet
reasonable scheduling, directed by NYLCare
Mid-Atlantic, during normal business hours.
(d) Each party shall use commercially reasonable
efforts to make the orderly transfer of Enrollees to
NYLCare Mid-Atlantic Participating Providers.
7.8 Rights and Obligations Upon Termination. Upon termination of
this Agreement for any reason, the rights of each party
hereunder shall terminate, except as provided in elsewhere in
this Agreement. Any such termination, however, shall not
release NYLCare Mid-Atlantic or Doctors Health from its
obligations under this Agreement prior to the effective date
of termination.
8.0 ALTERNATIVE DISPUTE RESOLUTION
8.1 Agreement to Arbitrate. Any controversy, dispute, or claim
arising out of or relating to this Agreement or the breach
thereof, including any question regarding the existence of an
event of default or the interpretation, existence, validity or
termination of this Agreement, shall be resolved in accordance
with the procedures set forth in this Section, which culminate
with final and binding arbitration; however, the procedures,
including arbitration, shall not be binding in a legal
proceeding brought by a third party against NYLCare
Mid-Atlantic or Doctors Health (a "Defendant"), or any cross
claim or third party claim by such Defendant against NYLCare
Mid-Atlantic or Doctors Health.
30
8.2 Consolidation. In the event of any controversy, dispute or
claim arising out of or related to the Risk Agreement is
related to any controversy, dispute or claim arising out of
this Agreement, then the parties agree that their respective
claims will be consolidated and resolved in a single
proceeding under this Section 8.
8.3 Informal Resolution. A party serve shall serve written notice
of any dispute, controversy, or claim arising out of this
Agreement. The notice shall describe the dispute, controversy,
or claim with sufficient specificity to give the other party
notice of its nature. Within thirty (30) days of the written
notice, representatives of the parties with authority to
settle the matter shall meet and confer in good faith at a
mutually acceptable time and place, and as often thereafter as
they may deem reasonably necessary, in an effort to reach an
amicable solution.
8.4 Demand for Arbitration. If the parties are unable to reach an
amicable solution after making good faith attempts as
described in Section 8.2, either party may initiate
arbitration proceedings by filing a demand for arbitration
with the American Arbitration Association ("AAA") in
Washington, D.C. A party wishing to commence arbitration will
send a written notice of intent to arbitrate to the other
party, and arbitration will be commenced within thirty (30)
days after such notice is received.
8.5 Mediation. The parties agree that arbitration before AAA will
be stayed pending mediation in accordance with AAA Mediation
Rules. If the parties are unable to agree on the selection of
a mediator, a mediator will be selected from a list of
neutrals provided by AAA. The parties will request that AAA
provide a list of three neutrals, each of whom shall have a
minimum of seven (7) years of experience in the provision of
legal services to the health care industry. If the parties are
unable to agree on a mediator from the list provided by AAA,
AAA will select a mediator from the list provided. Prior to
the selection of the mediator by AAA, the parties shall each
be permitted one strike from the mediator list provided by
AAA. If the parties are unable to reach an amicable resolution
of the dispute after good faith attempts at mediation, then
the parties shall proceed to final and binding arbitration as
set forth in Section 8.5.
8.6 Arbitration Procedures. Except as expressly provided in this
Section, the arbitration will be conducted in accordance with
the Commercial Arbitration Rules of the American Arbitration
Association, as they are in effect when the arbitration is
conducted.
(a) The arbitration will take place before a panel of
three (3) independent and neutral arbitrators, each
of whom shall have demonstrated
31
expertise in the health care industry in their
respective fields. The arbitration panel will be
composed of one attorney, one Chief Financial
Officer from a major health care provider, and one
person who has served as a Chief Executive Officer
of a major health care provider at the level of
senior management, except that none of these
individuals may be an employee of an insurance
company. The person who has served as a Chief
Executive Officer will be the chair of the
arbitration panel.
(b) The arbitration shall be conducted in the State
of Maryland unless otherwise agreed upon by both
parties.
(c) The decision of the majority of the arbitrators
will be final and binding. Judgment upon the award
rendered may be entered and enforced in any court of
competent jurisdiction. The parties shall bear their
own discretionary costs, including attorneys' fees,
but the cost of the arbitration itself will be shared
equally by the parties.
8.7 Injunctive Relief. Notwithstanding this agreement to
arbitrate, NYLCare Mid-Atlantic or Doctors Health may seek
interim and/or permanent injunctive relief pursuant to this
Agreement in any court of competent jurisdiction.
9.0 MISCELLANEOUS
9.1 Relationship of the Parties. This Agreement is not intended to
create nor shall be construed to create any relationship
between Doctors Health and NYLCare Mid-Atlantic other than
that of independent entities contracting for the purpose of
effecting provisions of this Agreement. Neither party nor any
of their representatives shall be construed to be the agent,
employer, employee or representative of the other.
9.2 Independent Judgment. Nothing in this Agreement, including
Network Management Physicians' participation in the Care
Management, Quality Management and Utilization Management
process, shall be construed to interfere with or in any way
affect a Participating Provider's obligation to exercise
independent medical judgment in rendering health care services
to Members.
9.3 Third Party Beneficiaries. This Agreement is not intended to
create or confer a third party beneficiary status or rights in
any person not a party to this Agreement, including Members,
Payors, Participating Providers or other third parties, unless
such rights are expressly set forth in this Agreement.
32
9.4 Contract Modifications for Prospective Legal Events. In the
event that any state or federal laws or regulations, now
existing or enacted or promulgated after the Effective Date of
this Agreement, are interpreted by judicial decision, a
regulatory agency or legal counsel to either party in such a
manner as to indicate that the structure of this Agreement may
be in violation of such laws or regulations, NYLCare
Mid-Atlantic and Doctors Health shall amend this Agreement as
necessary to bring it into compliance with the law. To the
maximum extent possible, any such amendment shall preserve the
underlying economic and financial arrangements between NYLCare
Mid-Atlantic and Doctors Health, which may include equitable
adjustments in the capitation rates or the consideration
received by Doctors Health pursuant to this Agreement
9.5 Confidentiality. The parties acknowledge that as a result of
this Agreement, each may have access to certain trade secrets
and other confidential and proprietary information of the
other. Each party shall hold such trade secrets and other
confidential and proprietary information, including the terms
and conditions of this Agreement, in confidence and shall not
disclose such information, either by publication or otherwise,
to any person not otherwise bound by a duty of confidentiality
without the prior written consent of the other party except as
may be required by law and except as may be required to
fulfill the rights and obligations set forth in this
Agreement.
9.6 Assignment and Delegation of Duties. This Agreement and the
rights and duties created hereunder may not be assigned nor
transferred by NYLCare Mid-Atlantic or Doctors Health without
the prior written consent of the other party, except that
Doctors Health may assign this Agreement and the rights and
duties created hereunder to an Affiliate of Doctors Health,
nor may, or will, any such rights or duties be assumed or
delegated by operation of law by any successor entity in a
statutory merger or similar business combination involving one
of the parties hereto in a transaction where such party is not
the surviving entity under applicable law. Any attempted
transfer or assignment by contract shall be void and of no
effect.
9.7 Governing Law. The validity, interpretation and performance of
this Agreement shall be governed and construed in accordance
with the laws and regulations of the State of Maryland,
including its choice of law rules, except to the extent such
laws and regulations are preempted or superceded by federal
law or regulation. The parties acknowledge that Doctors Health
is not authorized or qualified to engage in any activity which
may be construed or deemed to constitute the practice of
medicine or the business of insurance. To the extent any act
or service required of Doctors Health in this Agreement should
be construed or deemed, by any governmental authority, agency
or court to constitute the practice of medicine
33
or the business of insurance, the performance of said act or
service by Doctors Health shall be deemed waived.
9.8 Amendment. Except as provided above, amendments to this
Agreement shall be agreed to in advance in writing by NYLCare
Mid-Atlantic and Doctors Health.
9.9 Entire Contract. This Agreement and the attachments hereto
contains all the terms and conditions agreed upon by the
parties with respect to the subject matter hereof, and
supersedes all other agreements, express or implied, regarding
the subject matter hereof.
9.10 Notice. Any notice required hereunder shall be in writing and
shall be effective two (2) days after it is sent by United
States mail, postage prepaid, to Doctors Health and NYLCare
Mid-Atlantic at the address set forth below:
If to Doctors Health: Doctors Health, Inc.
▇▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Stewart B. Gold
Chief Executive Officer & President
If to NYLCare Mid-Atlantic: NYLCare Health Plans of the Mid-Atlantic, Inc.
▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇, Chief Executive Officer
or to such other address as either party shall notify in writing.
9.11 Enforceability and Waiver. The invalidity and non
enforceability of any term or provision of this Agreement
shall in no way affect the validity or enforceability of any
other term or provision. The waiver by either party of a
breach of any provision of this Agreement shall not operate as
or be construed as a waiver of any subsequent breach thereof.
9.12 Non-discrimination. Each party agrees not to discriminate
against any Member on account of race, color, age, marital
status, religion, national origin, gender, or physical or
mental handicap, or the source of payment.
9.13 Interpretation. For all purposes of interpretation or
construction of this Agreement, the singular shall include the
plural and the plural shall include the singular, and each
gender shall include the other gender. Captions and section
headings used herein are for convenience only and are not part
of this Agreement
34
and shall not be used in construing it.
9.14 Additional Documents. Each of the parties hereto agrees to
execute any document or documents that may be requested from
time to time by the other party to implement or complete such
party's obligations pursuant to this Agreement.
9.15 Indemnification. Each party agrees to indemnify, defend and
hold harmless the other, its agents and employees from and
against any and all liability or expense, including defense
costs and legal fees, incurred in connection with claims for
damages of any nature, including but not limited to bodily
injury, death, personal injury, property damage, or other
damages arising from the performance or failure to perform its
obligations under this Agreement, unless it is determined that
the liability was the direct consequence of negligence or
willful misconduct on the part of the other party, its agents
or employees.
9.16 Medical Judgment. NYLCare Mid-Atlantic and Doctors Health
agree that Participating Providers are solely responsible for
the professional decisions, judgments, treatments, diagnoses
and services delivered to Enrollees. Neither NYLCare
Mid-Atlantic nor Doctors Health is responsible for the
provision of such care. Neither NYLCare Mid-Atlantic nor
Doctors Health, or any of their officers, directors,
employees, agents or other representatives shall be liable or
responsible in any way to any party or person for any act or
omission of a Participating Provider in connection with the
rendering of health care services to Enrollees.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the 3rd day of October, 1997.
DOCTORS HEALTH, INC.
Witness:
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇ By: /s/ Stewart B. Gold
------------------ -------------------
Stewart B. Gold
35
Chief Executive Officer & President
NYLCARE HEALTH PLANS
OF THE MID-ATLANTIC, INC.
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇ By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
------------------ ----------------
▇▇▇▇ ▇▇▇▇▇▇▇
Chief Executive Officer
36
ATTACHMENT A
------------
For purposes of this Agreement, the Service Area for use by NYLCare
Mid-Atlantic for the enrollment of Members and to define in-area
emergency services shall be:
The State of Maryland, except for Prince George's County;
The Cities and Counties in the Commonwealth of Virginia identified in the map
attached as Exhibit 1 to this Attachment A.
37
EXHIBIT 1
ATTACHMENT A
------------
Map depicting NYLCare's service area in Maryland, the District of Columbia
and Virginia
38
ATTACHMENT B
------------
CAPITATION/FINANCIAL ARRANGEMENTS
---------------------------------
1. NYLCare Mid-Atlantic shall make Capitation payments to Doctors
Health on the tenth (10th) day of each month for all Members enrolled
in the Health Plan on the first (1st) day of such month and who
have selected or been assigned to a NYLCare Mid-Atlantic Physician
as their primary care physician in the Doctors Health Service Area.
A summary listing showing Enrollees (and their Primary Care
Physicians) will be provided (by electronic transfer where possible)
with payment from NYLCare Mid-Atlantic. Also on the listing will be a
calculation of any retroactive adjustments either adding or deleting
Enrollees, provided, however, that such retroactive adjustments
must be made within ninety (90) days of payment. Claims payments for
non-capitated Covered Services will be deducted from the capitation
payments due Doctors Health as provided in Section 3.4 of the
Agreement. Doctors Health shall be liable for the cost of all Covered
Services provided to any Member who selects or is assigned to a
NYLCare Mid-Atlantic primary care physician, PROVIDED, however, that
Doctors Health shall not receive a capitation payment, and shall not
be liable for the cost of Covered Services provided to any Member
who, as of the Effective Date, has been assigned a case manager for a
procedure and/or is in an institutional setting, including but not
limited to a hospital, until such Member has been discharged
from care and from the institutional setting or until such time as
the parties make a determination that the best interest of the
Enrollee would be served by transferring medical management of
the Enrollee from NYLCare Mid-Atlantic to Doctors Health. For
purposes of this Attachment B, Covered Services shall include
Emergency Services and Out-Of-Area Urgent Services (but no other
Covered Services) provided outside of the Doctors Health Service
Area. For Covered Services to Members which were initiated prior
to the Effective Date, NYLCare Mid-Atlantic shall be solely liable
for the cost of all such Covered Services for the period after October
1, 1997.
2. In consideration of the above capitation amounts, and except as set
forth above, Doctors Health shall provide or arrange for all those
Covered Services to Enrollees set forth in Attachment C, and shall
assume the responsibility for the cost of said services. Regardless of
the number of NYLCare Mid-Atlantic Physicians rendering services, if
any, to Enrollee during any month, only one capitation payment will be
made to Doctors Health each month for each Member. The capitation
payment shall be made regardless of the type or amount of service
rendered to the Member during a given month.
39
3. Capitation Schedule (Per Member Per Month)
------------------------------------------
Except as provided below, the capitation schedule (per member per
month) shall be **.*% of the Premium.
40
4. Capitation Schedule (Per Member Per Month) For Eligible Enrollees
In Certain Counties and Cities in the Commonwealth of Virginia
--------------------------------------------------------------
For the period October 1, 1997 through June 30, 1998, NYLCare
Mid-Atlantic will pay Doctors Health at least $*** PMPM for NYLCare 65
Enrollees residing in the following counties and cities in Virginia
regardless of AAPCC and/or Premium then in effect.
***
***
***
***
***
***
***
***
***
***
***
***
***
***
***
***
***
***
***
***
***
With respect to enrollees residing in Virginia counties not listed in this
Attachment B, NYLCare Mid-Atlantic will, through December 31, 1997, pay Doctors
Health *** $*** PMPM, regardless of the AAPCC and/or Premium then in effect.
41
