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HomeMy WebLinkAboutRES 89-189 R E S O L U T I O N WHEREAS, the City of Beaumont will become self-insured as to employee group health services; and, WHEREAS, as an integral part of the program of self- insurance, the city desires to contract with a third party administrator to administer claims, a utilization review firm and also desires to purchase stop-loss insurance coverage for the entire program; NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF BEAUMONT: THAT the City Manager be, and he is hereby, authorized to execute a contract with Greentree Administrators of Beaumont for administrative services, substantially in the form of the administrative services agreement attached hereto as Exhibit "A" , including contractual assurances that Greentree Administrators will comply with the city' s Minority Business Enterprise requirements. BE IT FURTHER RESOLVED that the City Manager be, and he is hereby, authorized to execute a contract with Managed Health Care, Inc. of Houston to provide utilization review services substantially in the form as attached hereto as Exhibit "B". BE IT FURTHER RESOLVED that the City Manager be, and he is hereby, authorized to take all necessary steps to purchase group excess insurance coverage from Harbor Insurance Co. with a specific retention of Seventy-Five Thousand Dollars ( $75, 000.00 ) per individual claimant and an individual lifetime maximum of One Million Dollars ( $1 ,000,000. 00 ) . PASSED BY THE CITY COUNCIL of the City of Beaumont this the day of SeptembEr , 1989. Mayor - Fko 7-CM ADMINISTRATIVE SERVICES AGREEMENT THIS ADMINISTRATIVE SERVICES AGREEMENT, made and entered into this 1st day of October, 1989, by and between City of Beaumont, a body politic organized and existing under the laws of the State of Texas [hereinafter referred to as the "Plan Sponsor/Administrator"] , and GreenTree Administrators (hereinaf- ter referred to as "Plan Supervisor") , a corporation duly organized and existing under the laws of the State of Texas. WITNESSETH: WHEREAS, the Plan Sponsor/Administrator [hereinafter "PS/A"] has established an Employee Welfare Benefit Plan to provide health care and other benefits for the PS/A's Employees; and WHEREAS, the Plan Supervisor has developed policies, inter- pretations, rules, practices, procedures, forms, manuals and com- puter programs for the purpose of providing independent adminis- trative claims services for employee welfare benefit plans offer- ing group health benefits, group term insurance coverages, and other group benefit programs; and WHEREAS, the PS/A desires to avail itself of the Plan Super- visor's claims administration services; and WHEREAS, Plan Supervisor desires to assist the PS/A in all aspects of the claims administration of the PS/A's self-funded Employee Welfare Benefit Plan; and WHEREAS, the PS/A desires to compensate Plan Supervisor for such claims administration services. NOW, THEREFORE, in consideration of the mutual promises set forth below, Plan Supervisor and Plan Sponsor agree as follows: 1. DEFINITIONS As used in this Agreement, the following terms are defined, and are to be read and understood in the context of laws of the State of Texas: 1. 1 "Beneficiary" means a person designated by a partici- pant or by the terms of any Employee Welfare Benefit Plan spon- sored by the PS/A, who is or may become entitled to a benefit thereunder. 1.2 "Claimant" means any person submitting expenses for payment or reimbursement under the Plan. 1.3 "Claims Coordinator" means the person or other entity providing services to the Plan's participants on behalf of the PS/A Employer in connection with the operation of the Plan, EYN161T "A " including enrolling new Employees in the Plan, providing claims forms and assisting in the completion of any necessary forms. Claims Coordinator is named on the Benefit Plan Summary Sheet of the Employee Benefit Booklet (Summary Plan Description) . 1.4 "Claims Escrow Account" means a claims escrow account, with such depository as Plan Administrator may select. 1.5 "Employee" means any individual directly employed by the PS/A, as an Employer, in any governmental or proprietary position of, and compensated for services, by the PS/A. 1. 6 "Employer" means the City of Beaumont, Texas. 1.7 "Employer Representative" means the one (1) participant or group member designated in writing by Plan Administrator to handle all transactions and communications between Plan Adminis- trator and Plan Supervisor concerning the Plan. 1.8 "Group Contract" means the coverage agreement or policy issued to Plan Administrator (Employer) by an insurance or rein- surance company. 1.9 "Named Fiduciary" means the person, firm or corporation who has the authority to control and manage the operation and administration of the Plan. The Named Fiduciary for the Plan is the PS/A, namely, the City of Beaumont, Texas. 1.10 "Participant" means any Employee of the PS/A who is or may become eligible to receive a benefit of any type under the terms of the Plan Document or Group Contract, or both. 1.11 "Plan, " also sometimes called "employee welfare benefit plan", or "benefit plan", means any plan, fund or program which was heretofore or is hereafter established or maintained by the PS/A for its employees who are eligible to receive benefits thereunder as defined by the Group Contract or the Plan Document, or both, to the extent that such plan, fund or program was estab- lished or is maintained for the purpose of providing for its par- ticipants or their beneficiaries, through the purchase of insur- ance or otherwise, medical, surgical, or hospital care or bene- fits, or benefits in the event of sickness, accident, disability, death, or other benefit permitted by the laws of the State of Texas. 1. 12 "Plan Administrator" or "Administrator" means the City of Beaumont, Texas, which has authority to control and manage the operation and administration of the Plan. 1.13 "Plan Benefits" means the benefits set out in the Plan. 1. 14 "Plan Documents" means the Plan Document, which pro- 2 vides the detailed description of benefits to be provided under the employee Welfare Benefit Plan; Summary Plan Description which describes the benefits provided by the Plan in such language that the average Employee can understand his rights and responsibil- ities in respect to the Plan; the Trust Agreement which creates and establishes the Plan itself, together with a Trust to hold the assets of the Plan in trust for the exclusive purpose of pro- viding benefits to Participants and their Beneficiaries, and de- fraying the reasonable expenses of administering the Plan; this Administrative Services Agreement; any insurance or re-insurance policy written to provide any coverage for any benefit offered by the Plan; and any other written instrument which in any way af- fects the administration, management or control of the Plan. 1. 15 "Plan Sponsor" means the City of Beaumont, Texas, which as Plan Administrator, has final responsibility for any and all payments made under Plan Document. 1. 16 "Plan Supervisor" means the person, firm or corporation providing contract claims administration services to Employer, in the latter's capacity as the Plan Administrator, which services include underwriting enrollment applications, maintaining current plan data, billing processing, adjudication, payment of claims, and providing the Plan Administrator with other information deemed necessary by Plan Administrator for the performance of its duties. 1.17 "Plan Year" means the 12-month period beginning on October 1 and ending on the following September 30. 1. 18 "Trust" means a fund or account to and from which moneys are allocated for the payment of Participants' benefit claims and the expenses of administering the Plan. 2. THE PS/A'S OBLIGATIONS The PS/A is the named fiduciary to the Employee Welfare Benefit Plan, which has discretionary authority to control and manage all aspects of the operation and administration of the Plan. Specif- ically with respect to this Agreement: 2 . 1 The PS/A shall provide written notice to Plan Super- visor or its Employer Representative of all information required by the Plan Supervisor to perform its duties under this Agree- ment. All transactions and communications with Plan Supervisor pertaining to the subject matter of this Agreement shall be made through Employer Representative. 2 .2 The PS/A shall disburse and deliver funds to the Plan Supervisor which the latter notifies the PS/A to be sufficient to cover valid claims for an agreed period of time, usually covering 3 one month's claims payments. The Plan Supervisor shall then pay individual claims which it has adjudicated for payment. 2.3 The PS/A shall immediately provide Plan Supervisor with copies of any and all modifications, revisions, or changes to the Plan as the same occur. 2.4 The PS/A shall provide Plan Supervisor current, updated (including all modifications, revisions, or changes) information on eligible participants, members and dependents on a format pre- scribed or approved by Plan Supervisor. PS/A shall immediately notify Plan Supervisor by verbal communication of any changes to such information (irrespective of whether such change is occa- sioned by an election to participate, an election to terminate participation, or eligibility requirements) . PS/A shall, within three (3) business days, follow such verbal communication by written confirmation to Plan Supervisor of the same. 2 .5 The PS/A shall mail to Plan Supervisor all written materials necessary for Plan Supervisor to complete any required monthly audit or management report, as determined by Plan Super- visor, which are in the possession of the PS/A no later than the 21st day of the month from which an audit or management report is requested to be performed. 2. 6 The PS/A shall be responsible to perform the foregoing duties and obligations, and agrees that it shall be solely liable for the performance of all said duties; and the PS/A further states that the Plan Supervisor shall have no authority to per- form any of the duties and obligations set forth in this Section 2, nor shall Plan Supervisor be liable to any participant, bene- ficiary or other entity for the performance, or lack thereof, of any such duty. 3. PLAN SUPERVISOR'S OBLIGATIONS The Plan supervisor shall have only such duties, and the discre- tionary authority to perform the same, as the PS/A deems to be necessary and agrees with the Plan Supervisor in writing to be performed by the Plan Supervisor, including the duties to: 3. 1 Construe and interpret the Plan, including the terms thereof; decide all questions of eligibility; process, investi- gate, and adjudicate all claims for benefits under the Plan; and determine the amount of any benefits to be paid for claims sub- mitted under the Plan; all such duties to be performed by the Plan Supervisor in accordance with the Plan documents, as that term is defined herein, and the provisions of the applicable laws of the State of Texas. 3 .2 Provide telephone coverage verification on behalf of 4 Employer's group health care benefit plan 365 days per year, 24 hours per day. 3.3 Maintain records of Plan enrollments and refusal of insurance benefits of Employer's participants or members. 3 .4 Maintain current records consistent with notifications and information required to be provided by and actually received from PS/A (Employer) . 3 .5 Process any evidence of good health statements which may be required of participants and dependents. 3.6 Timely respond to telephone and mail inquiries from participants regarding Plan benefits. 3 .7 Provide information concerning Plan benefits and eligi- bility (based on information provided by PS/A as Employer) to participants. 3.8 Assist Plan participants or members and dependents with instructions on claim filing. 3 .9 Process claims for benefits in a timely manner after receipt of all information necessary for such processing. 3.10 Receive claims and claim documents from participants and verify eligibility, such verification to be based on infor- mation provided by PS/A (Employer) . 3 .11 Review claims to determine whether (a) charges are usual, reasonable and customary, (b) diagnosis of medical condi- tion is one which is eligible for reimbursement under the Plan, and (c) coverage under the Plan is in force. 3. 12 Request additional information from claimants and/or providers of health care service if necessary for processing of claims. 3. 13 Coordinate Plan benefits with other benefit plans, insurance plans and health maintenance organizations. 3. 14 Process, issue and distribute claims checks or drafts to participants, providers of health care services, or others as applicable, and maintain documentation to support all such dis- bursements. 3. 15 Notify claimants in writing of ineligible claims filed, indicating the reason for the rejecting or denying the same. 3 .16 Furnish to PS/A standard Plan Supervisor internal forms, claims forms, I.D. cards, and EOB's. 5 3 . 17 Provide PS/A summarized annual management reports at no additional cost: (a) Monthly Check Register, (b) Monthly Paid Claims Register, (c) Paid Claims Analysis, (d) Pending Claims Listing, (e) Fund Account Statement, and (f) Claim Analysis by line of coverage and total. 3 .18 Provide PS/A summarized annual management reports at the close of the Plan Year; and, upon request, provide quarterly claims management reports either free of charge or at cost. 3.19 Provide Plan Sponsor all data, acquired by Plan Supervisor in performing its duties under this Agreement, nec- essary to be included by Plan Sponsor in preparation of all reports, summaries, and filings required to be filed by Plan Sponsor with the federal and/or state government or any agency or political subdivision therefor, or to be disclosed to Plan parti- cipants. 3 .20 Maintain a claim file for each participant for all claims reported to Plan Supervisor by the participants in the Plan. These files shall be made available to PS/A for consulta- tion and review upon reasonable notice during the business day at the office of Plan Supervisor. All such files, including orig- inal enrollment card, claims files, employee census adjustment forms and re-insurance accounting and billing files, are and shall remain the sole property of the Plan, but shall be main- tained by and remain in the custody of Plan Supervisor for so long as Plan Supervisor shall perform duties under this Agreement or any renewal of this Agreement. In the event that the services of Plan Supervisor shall terminate for any reason, then PS/A will promptly advance to Plan Supervisor the reasonable expenses esti- mated to be incurred by Plan Supervisor for copying and shipping al such files, the originals of which shall be shipped to PS/A or its designee, and the copies of which shall remain with and be- long to Plan Supervisor. Any balance owing to one of the parties by the other for such copying and shipping shall be paid within fifteen (15) days of a statement rendered therefor. 3 .21 The Plan Supervisor shall be responsible to perform the duties and obligations set forth in this Section 3 and for any other duties which it agrees with the PS/A in writing to perform for the Plan,and agrees that it shall be solely liable for the performance of all said duties. 6 4. FEES FOR SERVICES As compensation for providing independent administrative claims services to Plan Sponsor, Plan Sponsor shall pay Plan Supervisor the following fees in the manner and at the times specified: 4.1 Plan Sponsor shall pay Plan Supervisor a claims service fee in the amount of $7.43 per month per employee or group member participating in Employer's group health care benefit Plan(s) . The claims service fee is established for the base year beginning October 1, 1989. The claims service fee shall be guaranteed for a 24-month period. 4.2 Plan Supervisor shall not be obligated to begin render- ing services under this Agreement until Plan Sponsor has paid Plan Supervisor the first month's claims service fees. 4. 3 Plan Supervisor shall bill all subsequent monthly claims service fees on a monthly basis, and Plan Sponsor shall pay such fees to Plan Supervisor within fifteen (15) days of the date Plan Sponsor receives Plan Supervisor's statement for such services. 4.4 In the event that the PS/A requests that Plan Super- visor provide it with special reports, additional management reports, or other documents, PS/A shall pay to Plan Supervisor (a) an additional fee to be charged on a "per hour" basis, with such per hour fee to be equal to the standard per hour fee being charged for such services by Plan Supervisor at the time of such request; and (b) PS/A shall bear the costs of all expenses in- curred as a result of such request, including all legal, pro- fessional and printing costs. No such additional fees shall be incurred by Plan Supervisor without the specific written authorization therefor by the PS/A. 4.5 Designated Agent(s) - PS/A agrees and understand that the designated agent(s) on this account shall be , and Plan Supervisor is authorized to pay all applicable commissions to specified agent(s) as they are earned. Plan Supervisor is hereby author- ized to issue commissions to the above agent(s) in accordance with the specific provisions of the proposal accepted by Employer. Plan Supervisor does not assume any liability for acts of des-ignated agent(s) , unless said agent(s) is/are directly employed by Plan Supervisor. 5. EXTENSION AND TERMINATION OF AGREEMENT This Agreement shall automatically be renewed for successive twelve-month periods, unless terminated pursuant to and in accordance with Paragraphs 5. 1 and 5.2 below. The obligations 7 e set forth in this Agreement may be terminated: 5.1 After the initial 12-month term hereof, by either party upon giving the other sixty (60) days written notice of its intention to terminate. Any such notice shall be sent to Plan Supervisor by certified mail, return receipt requested. 5.2 Within the initial 12-month term hereof, by either party upon written notice because of the bankruptcy or insolvency of the other party, or the failure to perform any of the terms of any Plan Document, including this Agreement, by the other party. Such written notice shall specifically identify the ground(s) for giving such notice of termination and provide the other party 15 days within which to cure the defect underlying such ground(s) . Such notices shall be sent by certified U.S. Mail, return receipt requested. 5. 3 In the event this Agreement is terminated for any reason, PS/A and Plan Supervisor agree to expedite transfer of Plan Supervisor's responsibilities hereunder to such other con- tract provider of claims service as Plan Sponsor, in its sole discretion, shall select. PS/A and Plan Supervisor further agree if such transfer of responsibility cannot be made within the time permitted hereunder for notice of termination, then it is the duty of Plan Supervisor to continue providing services hereunder until such time as such transfer is made, and it is the duty of PS/A to continue to pay on a timely basis all costs, expenses, and claims service fees which may be incurred by Plan Supervisor during such transfer of responsibilities, all as required by the Plan Documents and the laws of the State of Texas to effect the several obligations owed by PS/A and Plan Supervisor solely to the Plan and its participants. Possession and ownership of all claims files and other plan documentation shall be governed by the provisions of Paragraph 3.20 above. 6. PS/A'S SOLE RESPONSIBILITY 6.1 PS/A shall forward all claims for plan benefits from its participants or group members-- to Plan Supervisor within ten (10) days after receipt by it of such claims in order that such claims can be reviewed in a timely manner and processed in accordance with the claims procedures stated in the Plan Documents. 6.2 PS/A shall be solely responsible for determining which of its participants or group members and their dependents are eligible for benefits provided under the Plan. 6.3 Plan Supervisor does not insure or underwrite the liability of PS/A under its group benefit Plan. PS/A has and shall retain the ultimate responsibility for (a) the payment of 8 claims under its group benefit Plan, and (b) the payment of all expense incidental to the administration of such group benefit Plan. 6.4 Plan Supervisor shall not be required, under any cir- cumstances, to issue payment(s) for any group insurance plan benefits, insurance premiums or any other costs arising out of the subject matter of this Agreement or the terms of the same, unless PS/A has previously deposited sufficient funds in the Trust or the Claims Escrow Account to cover such payments, and has previously given Plan Supervisor written notice of PS/A's desire that such payments or costs be made or satisfied by and from such funds. 6.5 PS/A, as the Named Fiduciary of the Plan, shall be solely responsible for complying with all reporting and dis- closure requirements provided by the laws of the United States and/or the State of Texas, and PS/A hereby expressly understands and agrees that Plan Supervisor has no responsibility or li- ability for any failure to comply with such reporting and dis- closure requirements. 6. 6 While Plan Supervisor recognizes that it is a fiduciary to the Plan, it is such fiduciary only to the extent that it is obligated to perform the obligations required of it by this Agreement or subsequent written agreement between it and the PS/A. 6.7 All governmental reports, including those required in connection with the reporting and payment of federal, state, or local taxes, are the sole responsibility of PS/A. While it is contemplated that the Plan shall operate as a tax-exempt entity, the satisfaction of any and all taxes imposed on the Plan shall be the sole responsibility of the PS/A. 6.8 All notices and information required to be given to Plan participants, group members or dependents, and any other record keeping relating thereto pursuant to any federal, state or local law, shall be the sole responsibility of PS/A. 7. MISCELLANEOUS 7.1 This Administrative Services Agreement shall be governed and construed in accordance with the laws of the State of Texas. 7.2 This Agreement constitutes the entire agreement between the parties hereto. All prior written or oral agreements are hereby superseded and replaced by this Agreement. 7. 3 This Agreement may not be modified or amended except by 9 a written agreement executed by both the parties hereto. 7.4 All notice required to be given to either party by this Agreement shall, unless otherwise specified in writing, be deemed to have been given three (3) days after deposit in the United States Mail, first class, postage prepaid, certified mail, return receipt requested, and properly addressed to the respective party as follows: If to PS/A: City of Beaumont Post Office Box 3827 Beaumont, Texas 77704 If to Plan Supervisor: GreenTree Administrators Post Office Box 7306 Beaumont, Texas 77726-7306 7.5 Plan Supervisor shall provide to PS/A current copies of all reinsurance policies purchased in connection with the subject Plan. IN WITNESS WHEREOF, PS/A and Plan Supervisor have caused this Administrative Services Agreement to be executed by their duly authorized officers' signatures, in duplicate originals, all as of the day and year first above written. CITY OF BEAUMONT, PS/A BY: City Manager GREENTREE ADMINISTRATORS, PLAN SUPERVISOR BY: Billy D. Lindsey, President 10 NETWORK AGREEMENT FOR PREFERRED PROVIDER PLAN ADMINISTRATION AGREEMENT This Agreement is entered into between Managed Healthcare, Inc. , a corporation organized under the laws of the State of Texas (hereinafter "MHI") with its principal office at 550 Post Oak Boulevard, Suite 400, Houston, Texas 77027 and City of Beaumont, a corporation organized under the laws of the State of Texas with its principal office at 801 Main, Suite 160, Beaumont, Texas 77701, hereinafter "Employer" . WHEREAS, MHI has entered into agreements with duly licensed physicians, hospital and other health care providers in the State of Texas to constitute a preferred provider organization, (PPO) and WHEREAS, EMPLOYER desires MHI to provide all services necessarily incidental to the operation and administration of EMPLOYER'S preferred provider plan and to administer EMPLOYER'S preferred provider plan, as provided herein, in full compliance with all requirements of the Texas Insurance Code and other applicable law, and WHEREAS, MHI is willing and able to perform such services; NOW, THEREFORE, in consideration of the mutual promises herein and intending to be legally bound hereby the parties agree as follows: DEFINITIONS A. "Audit Review" as used herein shall be defined as a review of a patient's medical record and hospital charges for evaluation of appropriateness of benefits reimbursement. B. "Beneficiary" as used herein shall mean those insureds of the Employer and their dependents as described in the Policy who are covered under the Policy for health benefit claims with respect to which MHI has mutually agreed with the Employer to provide the services hereunder. C. "Benefits" as used herein shall be defined as those medical or health care services and resulting expenses of Beneficiaries reimbursed or paid for by the Employer. a( N ' —a I -T--- " .13 ,, Pg. 2 D. "Concurrent Review" as used herein shall be defined as a form of patient care review which will occur during the Beneficiary's continued hospitalization and will consist of a review of the medical necessity for hospitalizations longer than the originally recommended length of stay for purposes of reimbursement or payment by the Employer. E. "Criteria" as used herein shall refer -to the most recent published standards of Interqual, Texas Medical Foundation, Intensity of Service and/or Severity of Illness applicable to review of hospitalizations. F. "Discharge Review and Large Case Review" as used herein shall be defined as an evaluation of inpatient acute care admissions to identify patients for whom treatment in an alternative setting is appropriate for the individual patient's needs and of acceptable quality. H. "Health Care Review Services" as used herein shall refer to Preadmission Evaluation and Continued Stay Review, and any other services set forth in this Agreement necessarily associated with same. I. "Non-Participating Provider" means any physician, hospital, or other health care provider who does not have a service agreement in effect with MHI. J. "Participating Hospital" means a hospital which has a Hospital Service Agreement in effect with MHI to provide Covered Services to Beneficiaries at PPO rates. K. "Participating Physician" means a duly licensed physician who has a Practitioner Agreement in effect With MHI to provide Benefits to Beneficiaries at PPO rates. L. "Participating Provider" means any Participating Physician, Participating Hospital, or other health care provider who has a service agreement in effect with MHI to provide Benefits to Beneficiaries at PPO rates. M. "Phvsician Reviewer" as used herein shall be defined as a physician who has agreed to review medical care based upon approved standard Criteria for recommendation of benefits reimbursement. N. "Plan" as used herein shall refer to the group health policy by the Employer which includes provisions for preferred providers and any subsequent amendments or changes thereto. Pg. 3 0. "PPO" means the Managed Healthcare, Inc. , Preferred Provider Organization. P. "PPO Rates" means the rates charged by Participating Providers or the agreed upon reimbursement rate for providing Benefits to Beneficiaries pursuant to the terms and conditions of the Agreement in effect between MHI and each Participating Provider. Q. "Preadmission Evaluation" as used herein shall be defined as an evaluation of the medical necessity and length of stay assignment of a proposed inpatient hospital admission of a Beneficiary for purposes of reimbursement or payment by the Employer. R. "Unfavorable Recommendations" as used herein shall refer to a recommendation for purposes of reimbursement or payment by the Employer that proposed admission to or continued stay in a hospital does not meet reimbursement criteria. SECTION 1 - HEALTH CARE REVIEW SERVICES MHI will recommend, for purposes of reimbursement and payment by the Employer, whether hospital admissions and lengths of hospital stays might be eligible for reimbursement and provided at an appropriate level of care consistent with professionally recognized standards of quality health care. MHI will conduct Preadmission Evaluation and Concurrent Review activities in order to assist in determining the level of reimbursement or payment by the Employer pursuant to the Plan. Such activities will be performed only within the U.S.A. A. Services 1. Preadmission Evaluation. MHI will conduct Preadmission Evaluation, based on applicable Criteria, on all hospitalizations upon request of a physician, Beneficiary, or the Employer. Hospitalization admissions are divided into two types: Non-emergency elective admission, defined here as admissions that can be scheduled in advance where no impairment of activity or organ damage would be expected to result from advanced scheduling; and Emergency hospitalizations, defined here as admissions necessitated by the sudden onset of a medical condition manifesting itself by acute symptoms of severity to create an immediate life-threatening or a system-threatening situation for the patient which could Pg. 4 result in death or irreversible damage to any organ if treatment is delayed. Evaluation shall be provided without unnecessary disruption to either the patient or health care provider to the fullest extent possible. Before or during each reported hospitalization, authorized MHI personnel will evaluate the proposed treatment plan as to medical appropriateness and necessity for the purposes of reimbursement or payment by the Employer and identify treatment which could be performed on an outpatient basis. All admissions for which reimbursement criteria, based on the information available to MHI, can be confirmed, non--emergency or emergency, will be assigned a recommended length of stay based on the request of the Beneficiary's attending physician, area norms for the diagnosis or procedure, other health problems of the Beneficiary, the age of the Beneficiary, and other relevant factors. If the reimbursement criteria cannot be confirmed, MHI shall forward an Unfavorable Recommendation to the Employer for final decision regarding payment. 2 . Concurrent Review. MHI will conduct Concurrent Review, based on applicable Criteria, on all hospitalizations upon the request of a physician, Beneficiary, or the Employer. In the course of Concurrent Review, MHI will determine, for purposes of reimbursement or payment by the Employer, whether a concurrent hospital stay may be eligible for reimbursement and appropriate and, as indicated, will assign a new recommended length of stay. MHI will not recommend approval of reimbursement or payment of the expenses for any continued hospitalization where the attending physician, although medically or logistically possible to do so, does not provide MHI with the medical reason for the continued hospitalization or where prior authorization for the continued hospitalization is not requested. If, in the opinion of the Beneficiary's attending physician, the Beneficiary needs to be hospitalized longer than the originally recommended length of stay, the attending physician must request prior review whenever medically or logistically possible for the additional days required. This request must be telephoned to MHI prior to the additional days being utilized. At that time, the medical reason for the extension requested must be provided to MHI by the attending physician. If the extension is confirmed by MHI as being potentially eligible for reimbursement and appropriate, MHI will then assign a new recommended length of stay. MHI will keep the Beneficiary, his/her attending physician, and the hospital informed in writing of each recommendation. If the reimbursement criteria of an extended length of stay cannot be confirmed, MHI shall forward an Unfavorable Pg. 5 Recommendation to the Employer for final decision regarding payment. MHI will not recommend approval of reimbursement or payment of the expenses for any continued hospitalization where the attending physician does not provide MHI with the medical reason for the continued hospitalization or where prior authorization for the continued hospitalization is not requested, except for days during which a request for prior review was not medically or logistically possible. 3 . Discharge Review and Large Case Review. MHI will conduct Discharge Review and Large Case Review on any unusual cases or diagnosis that traditionally result in large claims. Social service consultation is obtained for specific disease categories upon admission in an effort to expedite discharge in a timely fashion. Arrangements for an alternative setting for care are investigated and the family, nursing unit and attending physician, if appropriate, are contacted to verify the individual patient's specific post-discharge treatment needs. MHI will coordinate with Social Services in making preliminary plans for the alternative setting to which the patient will be moved upon discharge and then coordinates with the patient, the family and hospital staff. B. Responsibility and authority 1. It is understood by all parties that any advice, evaluations, reviews, or recommendations by MHI regarding Health Care Review Services are solely for the purpose of assisting in the determination of reimbursement or payment by the Employer for services under the Plan. MHI shall have no participation in or responsibilities for the medical or health care provided by Beneficiary's attending physician or any other health care providers. Further, MHI shall not serve as a consultant, partner or supervisor of any physician or other health care provider engaged in providing medical or health care to a Beneficiary. Any and all treatment decisions and medical or health care remain the sole prerogative and responsibility of the attending physician or other health care providers based on his/her independent professional judgment. Regardless of any advise, evaluations, reviews, or recommendations involving Health Care Review Services (except as they may affect reimbursement or payment by the Employer) , all Beneficiaries shall be informed by MHI in writing of their rights to the following: Select an alternate setting or type of health care facility for performance of any medical or health care; Pg. 6 Seek whatever medical or health care they may choose; Remain in health care facilities for longer periods of time than approved; and . Select any health care provider of their choosing. 2. MHI shall have no obligation to provide Health Care Review Services with regard to a Beneficiary for whom the Employer has not provided MHI with the Beneficiary' s valid written authorization for access to and disclosure of confidential information concerning the Beneficiary, as set forth in this Agreement. Further, MHI shall have no obligation to provide Health Care Review Services with regard to a Beneficiary for whom MHI is denied access to necessary or sufficient information about the Beneficiary, either from the attending physician, health care facility, other health care providers, or the Beneficiary. 3. Claim processing and payment determination shall be the sole responsibility of the Employer. C. Review personnel 1. MHI shall utilize Physician Reviewers to supervise review by qualified professional staff and to conduct that portion of evaluation or review appropriate, in MHI 's sole discretion, for a physician. MHI shall be free to contract with or assign review, reconsideration or any other obligations of MHI to physicians or other health care providers of its choice. MHI shall be solely responsible for any compensation of said individuals, unless otherwise provided herein or agreed upon by the parties. 2 . Only Physician Reviewers will be permitted to make Unfavorable Recommendations. 3 . Physician Reviewers will not review cases under their own care or under the care of physicians or health care providers with whom they are partners or business associates. D. Reconsideratons and appeals 1. MHI will orally notify the following parties: the Beneficiary, attending physician, and the hospital (where appropriate) of any Unfavorable Recommendation as promptly as is reasonably possible following the recommendation. The case will automatically be referred to a second Physician Reviewer. Pg. 7 2. When the appeals process is triggered, a second Physician Reviewer will review the case and call the. attending physician if more information is needed. The Physician Reviewer will also review the first Physician Reviewer's recommendation. If the second Physician Reviewer certifies the hospitalization, a certification letter will be sent to the physician and the Beneficiary after a reasonable attempt was made to notify the physician by telephone. If the second Physician Reviewer recommends a denial or limitation of certification a reasonable attempt will be made to notify the physician. MHI will also notify the attending physician, patient and hospital of the recommendation of denial or limitation of certification in writing. MHI will recommend that the Employer may wish to deny or limit plan benefits. Where the Beneficiary for whom an Unfavorable Recommendation has been made is currently hospitalized, MHI shall use its best efforts to complete reconsideration within three (3) days; where the Beneficiary is no longer hospitalized, MHI shall complete reconsideration within sixty (60) days. Written results of the reconsideration will be forwarded to the Employer and if affirmed will be forwarded to the attending physician and Beneficiary. E. Obligations of the Payor In addition to other services referenced elsewhere in this Agreement, the Employer will: 1. Provide a liaison with MHI for communication and discussion of appropriate matters, including implementation, promotion and utilization of Health Care Review Services and to make final decisions regarding Unfavorable Recommendations by MHI before such are communicated to the Beneficiary and the attending physician. 2 . Provide all Beneficiaries with written information regarding the Plan, including specified provisions on the requirements of Preadmission Evaluation and Concurrent Review, the obligations of Beneficiaries, and the participation and role of MHI, through distribution of written material either provided by or approved by MHI. Pg. 8 3. Provide MHI with valid written authorization of all Beneficiaries, or the adult responsible for any minor Beneficiary, for any and all physicians and health care providers to release confidential information to MHI and to allow MHI access to and the right to inspect and/or copy any confidential information, including but not limited to patient records of the Beneficiaries. Such authorization shall be in the form attached as Exhibit B, or as otherwise agreed to by the parties. 4. Provide an exclusion in the Plan for expenses that are not medically necessary. 5. Reimburse MHI for any charges or fees of attending physicians, health care facilities or health care providers for access to and/or for providing information required or requested by MHI in performing Health Care Review Services. 6. The Employer will provide MHI a listing of all Beneficiaries as of the effective date of a Plan. This listing shall be revised and updated by the Employer monthly, with a copy provided to MHI, on or before the 5th day of each month during the term of this Agreement. F. Reporting, Records and Confidentiality 1. MHI will furnish to Employer periodic statistical reports. 2. MHI will maintain records related to the Health Care Review Services for the greater of four (4) years or the period of time required by law. Such records shall remain confidential. MHI will adhere to all laws regarding privacy of any data or records concerning the Beneficiaries and MHI will safeguard to the extent reasonably possible such data from access by unauthorized individuals. 3. MHI agrees that neither MHI nor any of its employees, contracting physicians, or agents shall make any disclosure of information identifiable to a particular patient, beyond those disclosures necessary to fulfill its obligations pursuant to this Agreement, unless valid written authorization to release such information is provided by the Beneficiary, or adult responsible for a minor Beneficiary, or pursuant to statute, valid subpoena or court order. Pg. 9 SECTION 2 - PREFERRED PROVIDER ORGANIZATION SERVICE A. Services. The services and benefits available to Beneficiaries through participation in the PPO shall be those physician services and hospital services available to Beneficiaries participating in the Plan. Beneficiaries may elect to receive any or all Benefits, as needed, from Participating Providers. However, the PPO Incentives set forth in Exhibit A of this Agreement apply only to those Benefits provided by Participating Providers. Benefits provided by Non-Participating Providers shall be subject to the terms and conditions of the Plan. Employer will provide MHI with a copy of their Plan and will provide incentives in such Plan for Beneficiaries to use Participating Providers. MHI shall provide Employer with its Participating Provider list, categorized by specialty and geographic location, in sufficient quantities to distribute to all Employees. Said list shall be updated from time to time as MHI deems appropriate. Nothing contained in this Agreement shall constitute a warranty, representation or guarantee by MHI as to the availability of or the quantity or quality of the health care services to be provided by the providers or facilities listed on the Participating Provider list or any revision thereto, and MHI shall have no liability to the Employer or any Beneficiary with respect to such availability, quantity or quality. B. Participating Providers. MHI shall, at all times during the term of this Agreement and any renewal period thereof, have provider agreements in effect with a sufficient number of Participating Providers as MHI deems necessary to provide Benefits to Beneficiaries. MHI represents that by the terms of such provider agreements, all Participating Providers shall: 1. Have all the requisite licenses and certifications from the State of Texas, as applicable, and all official boards or bodies having authority over the area of health care in which they are engaged. 2 . Treat all Beneficiaries with the same standard of care skill, and diligence as is customarily used by such providers, and shall not discriminate in their treatment of patients by reason of the fact that certain patients are Beneficiaries and others are not. 3 . Maintain adequate medical records pertaining to Beneficiaries and furnish such records to MHI and other designated persons or entities as is necessary for the administration of MHI. The release of such records is subject to all appropriate medical record confidentiality laws and regulations applicable to MHI and Participating Providers. Pg. 10 4 . Cooperate with the MHI PPO utilization review program. 5. Cooperate and participate in any internal peer review credentialing process and complaint resolution procedures established by MHI. 6. Maintain policies of general liability, professional liability, and other types of insurance in amounts deemed acceptable by MHI. SECTION 3 - AUDIT REVIEW SERVICES MHI will conduct audits of hospital bills upon the request of the Employer or based on criteria predetermined by the Employer. A review of the patient's chart is scheduled and performed at the hospital. The results of the analysis are documented at the hospital 's business office to assure prompt and efficient resolution of any billing inaccuracies. A report of the audit will be forwarded to Employer. SECTION 4 - SECOND SURGICAL OPINION SERVICES MHI will suggest that a Second Surgical Opinion be obtained if the planned procedure might be performed in an alternate setting, or might not meet the Plan's reimbursement critria. At the Beneficiary's or Employer's request MHI will provide a list of three or more physicians names in the appropriate surgical specialty who can perform the required examination. MHI will arrange for an appointment with the physician of the Beneficiary's or Employer's choosing if so requested. A report from the second physician must be communicated to MHI prior to admission to a hospital or performance of the planned procedure, whichever occurs first. SECTION 5 - FEES A. Employer agrees to compensate Participating Providers for the medical services provided hereunder as follows: 1. MHI and/or Participating Providers will submit bills to Employer, or its designee as soon as reasonably possible after medical and hospital services are rendered to Beneficiaries. Such bills shall be in such form as the parties may reasonably agree. Pg. 11 2. Employer, or its designee will calculate the amount due to Participating Providers for such medical and hospital services and will remit such amount directly to the Participating Provider furnishing such services. B. In consideration for a three year services contract provided by MHI hereunder, the Employer shall pay a graduated MHI Fee of: First year - $2 . 00 Second year - $2.50 Third year - $3 . 00 This fee is for administrative services each month during the term of this Agreement for each policy certificate holder of the Employer participating in the Plan on the first day of such month. Such payments shall be due and payable on a monthly basis in advance. C. Employer will reimburse MHI for any charges or fees of attending physicians, health care facilities or health care providers for access to and/or for providing information required or requested by MHI in performing Health Care Review Services. D. Notwithstanding the foregoing paragraph B of this Section, MHI shall have the right to change any fee or other charge under this Agreement on any anniversary date of this Agreement by giving not less than ninety (90) days prior written notice to the Employer. Any changes in any fee under this Agreement shall apply to periods occurring subsequent to the first anniversary date of this Agreement after the notice of such change, unless otherwise agreed to in writing by the parties hereto. SECTION 6 - STATUS OF MHI A. MHI shall be and shall operate as an independent contractor supplying services to the Employer under this Agreement, and MHI shall not have any authority to bind or obligate the Employer to any contractual obligations of any nature. MHI shall have full and complete control over its operations related to its performance under this Agreement; provided that it is understood and agreed that the services to be performed by MHI pursuant to this Agreement shall be purely ministerial in nature and shall, to the extent not in violation of applicable law, be performed within the framework of policies, interpretations, rules, practices and procedures made or established by the Employer. Pg. 12 B. It is acknowledged and agreed that MHI is not a successor to any other prior employee benefits administrator(s) or insurance carrier(s) and shall not at any time be held liable for any action or default of such predecessors or their agents or of any other person who was connected in any way with the previous performance of services for or with respect to the Plan. For the purposes of the Employee Retirement Income Security Act of 1984 and of any state legislation of similar nature if applicable, the Employer shall be deemed the administrator and sponsor of the Plan. SECTION 7 - INDEMNITY A. MHI and each person who is or was an officer, director, employee, contract physician, agent or representative of MHI shall, in accordance with this Agreement, be indemnified and held harmless by the Employer from and against any and all damages, losses, liabilities and expenses, including attorneys' fees, arising from any and all claims, demands, actions, suits or proceedings, civil, criminal, administrative, or otherwise, in which they may be involved, as a party or otherwise, by reason of (i) the existence or operation of the Plan; (ii) any acts or omissions of MHI while performing such services under this Agreement; (iii) having been an officer, director, employee, contract physician, agent or representative of MHI while MHI was performing services under this Agreement, (whether or not they continue to be such at the time any such liability or expense is paid or incurred) ; (iv) any representation by the Employer as to the participation or role of MHI; (v) any verification or denial of health benefit coverage by MHI; or (vi) any acts or omissions of the Employer or its officers, directors, employees, agents or representatives. Indemnification hereunder shall include any claim or liability arising from or premised upon any injury to a third party by reason of acts, omissions, or negligence of MHI or any of its officers, directors, employees, contract physicians, agents, or representatives in the performance of Health Care Review Services, including but not limited to issuance of any Unfavorable Recommendation or verification or denial of health benefit coverage or eligibility. B. MHI agrees to indemnify and hold Employer harmless from and against any and all damages, losses, liabilities q Pg. 13 and expenses, including attorney's fees, arising from any and all claims, demands, actions, suits or proceedings, civil, criminal, administrative, investigative or otherwise, in which they may be involved, as a party or otherwise, by reason of: (i) any acts or omissions of MHI while performing such services under this Agreement; (ii) any acts or omissions of MHI or its officers, directors, employees, agents or representatives. C. The rights of indemnification provided in this Agreement shall be in addition to any rights to which MHI or any officer, director, employee, contract physician, agent or representative thereof may be entitled by contract or as a matter of law, and shall extend to their respective successors, heirs and legal representatives. D. Nothing in this Agreement shall be construed to make the Employer or MHI, or their respective agents or representatives, liable in situations in which they are otherwise immune from liability. E. MHI and its contracting physicians shall at all times maintain appropriate liability insurance applicable to the Health Care Review Services. SECTION 8 - TERM A. The initial term of this Agreement shall be for a period of three years (3) from the effective date October 1, 1989 hereof. Thereafter, the term of the Agreement shall be extended for successive one (1) year periods, provided that either party hereto may terminate this Agreement at the end of such initial three (3) year term or any such one (1) year extension term by giving to the other party notice of such termination at least sixty (60) days prior to the end of such initial three (3) year term or such one (1) year extension term. In the absence of 60 days prior written notice, this Agreement shall automatically renew for succeeding one (1) year periods on each anniversary date. Pg. 14 B. Notwithstanding any termination of this Agreement for any reason, the obligations of the Employer and the rights of MHI and its officers, directors, employees, contract physicians, agents and representatives as contained herein above shall survive the termination of this Agreement. C. Nothing in this Agreement shall be construed to limit either party's lawful remedies in the event of a material breach of this Agreement. SECTION 9 - LIMITATIONS OF LIABILITIES AND OBLIGATIONS A. MHI shall have no responsibility, risk, or liability for funding the Plan. The responsibility and obligation for funding the Plan shall be solely and totally the responsibility of the persons or entities so provided in the Plan. MHI shall not be liable for or be required to use its funds for the payment of Benefits under the Plan. MHI shall not be responsible or obligated for the collection, preservation, maintenance or investment of any assets or funds of the Plan. MHI shall not be considered the insurer or underwriter of the liability of the Employer to provide Benefits for the Plan's Beneficiaries and the Employer shall have sole and final responsibility and liability for determinations regarding and payments of Benefits in accordance with the provisions of the Plan. All review of denied Benefits or Unfavorable Recommendations and final Benefits decisions will be the responsibility of the Employer. The Employer shall be responsible for all expenses of the operation of the Plan, except as provided under this Agreement. MHI shall have no responsibility or obligation to take action, legal or otherwise, against any insurer, the Employer, any employee or any other person or entity to enforce provisions of the Plan or otherwise. B. The Employer shall designate legal counsel for any legal action on a claim for Benefits. The defense of any legal action on a claim for Benefits shall not be the obligation of MHI. MHI shall cooperate with the legal counsel designated by the Employer in the event of any litigation against or under the plan. Pg. 15 SECTION 10 - SUBCONTRACTORS MHI reserves the right to obtain the services of persons or firms having special knowledge or facilities in performing its duties under this Agreement. Charges for such services, except as provided elsewhere in this Agreement or so agreed by the parties, will be the responsibility of MHI. SECTION 11 -EXTENT OF DUTIES; NO LIMITATION OF OTHER BUSINESS MHI shall expend such time and resources in connection with its duties hereunder as it, in its sole discretion, shall deem necessary or proper. Nothing in this Agreement shall be construed as limiting or restricting MHI 's right to engage in any other business activities, including, but not limited to, providing to other parties services similar to those provided by MHI hereunder. SECTION 12 - FORCE MAJEURE If the performance of any obligation of MHI is prevented, hindered, delayed or otherwise made impossible by reason of any Act of God, strike, flood, riot, fire, explosion, war or any other casualty or cause beyond the control of MHI (whether or not similar to any of the causes enumerated herein) , MHI shall be excused from the performance of such obligation to the extent such performance is so prevented, hindered, delayed, or made impossible. SECTION 13 - NOTICES Except as otherwise provided herein, all notices, requests, demands and other communications required or permitted to be given hereunder shall be in writing and shall be deemed to have been duly given if delivered personally, given by prepaid telex or telegram or mailed first-class, postage prepaid, certified mail to the party to receive such notice, request, demand or communication at such party's address set forth in this Agreement. Any notice given pursuant to this Agreement shall be effective (i) if delivered personally, when delivered; (ii) if sent by telex or telegram, 24 hours after sending; and (iii) if mailed, 48 hours after mailing. W Pg. 16 SECTION 14- GOVERNING LAW: INTERPRETATION• SECTION HEADINGS This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Texas. The section headings contained herein are for purposes of convenience only, and shall not be deemed to constitute a part of the Agreement or to affect the meaning or interpretation of this Agreement in any way. SECTION 15 - SEVERABILITY Should any provision of this Agreement be held unenforceable or invalid under the applicable state or federal law or under the applicable laws of any other jurisdiction, then the parties hereto agree that such provision shall be deemed modified for purposes of performance of this Agreement in such jurisdiction to the extent necessary to render it lawful and enforceable, or if such a modification is not possible without materially altering the intention of the parties hereto, then such provision shall be severed herefrom from purposes of performance of this Agreement in such jurisdiction. The validity of the remaining provisions of this Agreement shall not be affected by any such modification or severance. SECTION 16 - ENTIRE AGREEMENT This Agreement sets forth the entire agreement and understanding of the parties with respect to the transaction contemplated hereby, and supersedes all prior agreements, arrangements and understandings related to the subject matter hereof. No representation, promise, inducement or statement of intention has been made by any party hereto which is not embodied in this Agreement, and no party hereto shall be bound by or liable for any alleged representation, promise, inducement or statement of intention not so set forth. SECTION 17 - BINDING EFFECT; ASSIGNMENT All the terms, provisions, covenants and conditions of this Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties hereto and their respective successors. This Agreement and the rights and obligations of the parties hereto may not be assigned or delegated by either party except as provided herein, except Pg. 17 that MHI may assign its rights and obligations pursuant to this Agreement to a majority owned subsidiary of MHI, to any entity which owns a majority of MHI, or to any entity which in conjunction with an assignment -succeeds to substantially all of the assets and liabilities of MHI. SECTION 18 - AMENDMENT; WAIVER This Agreement may be amended, modified, superseded or cancelled, and any of the terms, provisions, covenants or conditions hereof may be waived, only by a written instrument executed by all parties hereto, or, in the case of a waiver, by the party waiving compliance. The failure of any party at any time or times to require performance of any provision hereof shall in no manner affect the right to enforce the same. No waiver by any party of any condition, or of the breach of any term, provision or covenant contained in this Agreement., in any one or more instances, shall be deemed to be or construed as a further or continuing waiver of any such condition or breach or waiver of any other condition or of the breach of any other term, provision or covenant. SECTION 19 - COUNTERPARTS This Agreement may be executed simultaneously in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. This Agreement shall be binding when one or more counterparts hereof, individually or taken together, shall bear the signature of the parties reflected hereon as signatories. Pg. 18 THE PARTIES HERETO acknowledge that each has read the Agreement, understands it, and agrees to be bound by its terms. The parties further agree that this Agreement and any Exhibits constitute the complete and exclusive statement of the Agreement between the parties, except as otherwise specifically set forth herein, and supersedes all proposals oral or written, understandings, representations, warranties, conditions, covenants, and all other communications between the parties relating to the matters to be performed hereunder. MANAGED HEALTHCARE INC BY: WT7 T T AM T. COHEN Name VICE PRESIDENT - SALES/MARKETING Title ; l�� fiGZC= IV Signatu" Date 550 POST OAK BLVD. , #400 HOUSTON, TX 77027 Address CITY OF BEAUMONT "EMPLOYER" BY: Name Title Signature Date Address Ji . M ] ► M M I ► Managed Healthcare Inc. 550 Post Oak Blvd. • Suite 400 • Houston, Texas 77027'• (713) 961-4096 ADDENDUM TO NETWORK AGREEMENT FOR PREFERRED PROVIDER PLAN ADMINISTRATION AGREEMENT1- BETWEEN MANAGED HEALTHCARE, INC. AND CITY OF BEAUMONT In order that Managed Healthcare, Inc. may fully cover the City of Beaumont's Utilization Review Program needs, the Addendum to the Network Agreement is offered at no additional cost and is as follows: 1. Large Case Management. 2. Second Surgical Opinion. 3. Psychiatric and Chemical Dependency Case Review. 4. Discharge Planning. 5. Outpatient Surgery Review. CITY OF BEAUMONT MANAGED HEALTHCARE, INC. NAME: NAT 1 Col_ TITLE: TITL . � L DATE: DATE:4;�21 Z 1�29 D � rr--" MadR-113 3 1989 O S TO z