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2008-298sAour doc u men ts\ordinances\08\uhc ordinance.doc I ORDINANCE NO. &61) -2'f f AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF DENTON, TEXAS, AUTHORIZING THE CITY MANAGER TO EXECUTE AN ADMINISTRATIVE SERVICES AGREEMENT FOR SELF-FUNDED EMPLOYEE BENEFIT PLANS WITH UNITED HEALTHCARE INSURANCE COMPANY; AUTHORIZING THE EXPENDITURE OF FUNDS THEREFOR; AND PROVIDING AN EFFECTIVE DATE. WHEREAS, United HealthCare Insurance Company ("UHC") is in the business of providing third party administrative services in conjunction with self-funded employee benefit plans; and WHEREAS, the City of Denton desires to enter into an Administrative Services Agreement (the "Agreement") with UHC to provide administrative services only for the City's self-funded health benefits program; NOW, THEREFORE, THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS: SECTION 1. The City Manager, or his designee, is hereby authorized to execute an agreement with UHC in substantially the form of the Agreement which is attached hereto and incorporated herein by reference. SECTION 2. The expenditure of funds as provided for in the attached Agreement is hereby authorized. SECTION 3. This Ordinance shall become effective immediately upon its passage and approval. PASSED AND APPROVED this the 2r day of loe , 2008. MARK A. BURROUGH AYOR ATTEST: JENNIFER WALTERS, CITY SECRETARY BY: ~ APPROVED AS TO LEGAL FORM: ANITA BURGESS, CITY ATTORNEY BY: -49%z- ADMINISTRATIVE SERVICES AGREEMENT This Administrative Services Agreement ("Agreement") between United HealthCare Insurance Company ("Our," "Us," or "We" in this Agreement) and City of Denton ("You' or "Your" in this Agreement) is effective January 1, 2009 ("Effective Date"). This Agreement covers the services We are providing to You, either directly or in conjunction with one of Our affiliates, for use with Your self-funded employee benefit plan. United HealthCare Insurance Company identifies this arrangement as Contract No.: 715130. By signing below, each party agrees to the terms of this Agreement. United HealthCare Insurance Company City of Denton 450 Columbus Boulevard 601 East Hickory, Suite A Hartford, CT 06115-0450 Denton, TX 76205 By rV By Authori ed Signature Authorized Signature Print Name rint Name Gun1n~P 6,~ I I Print Print Title `1; MuHUQ e►' Date Date ~ Z UHCASA05 (Oct 07) APPROVED AS TO FVK►~n: CITY-ATTORNr- , CITY,OF'Dct~TON. TEXAS Table of Contents Section 1 - Definitions .................................................................................................................................2 Section 2 - Employee Benefit Plan: Your Responsibilities ..4 Section 3 - Your Other Responsibilities ..4 Section 4 - Services Provisions ..5 Section 5 - Service Fees 12 Section 6 - Providing Funds for Benefits 13 Section 7 - Term Of The Agreement 14 Section 8 - Termination Of The Agreement 15 Section 9 - Records, Information, Audits 15 Section 10 - System Access 16 Section 11 - Taxes And Assessments 17 Section 12 - Indemnification 17 Section 13 - Plan Benefits Litigation 17 Section 14 - Mediation 18 Section 15 - Miscellaneous 18 EXHIBIT A - SERVICE FEES 20 EXHIBIT B - BUSINESS ASSOCIATE ADDENDUM TO ADMINISTRATIVE SERVICES AGREEMENT ..............................................................................................................................................21 Section I - Definitions When these terms are capitalized in the Agreement they have the meanings set forth below. The words may be singular or plural. Agreement Period: The period of twelve (12) months commencing on the Effective Date and automatically continuing for additional 12-month periods until the Agreement is terminated. Bank: JPMorgan Chase Bank, New York, New York. Bank Account: Benefits Demand Deposit Bank Account maintained for the payment of Plan benefits, expenses, and fees. Employee: A current or former employee of You or an Affiliated Employer. ERISA: Employee Retirement Income Security Act of 1974, as amended from time to time. IRC: The United States Internal Revenue Code, as amended from time to time. Managed Care Network: The group of Network Providers We make available to the Plan who have entered into or are governed by contractual arrangements under which they agree to provide health care services to Participants and accept negotiated fees for these services. Network Provider: The physician, or medical professional or facility which participates in a Managed Care Network. A provider is only a Network Provider if they are participating in a Managed Care Network at the time services are rendered to the Plan Participant. Overpayments: Payments that exceed the amount payable under the Plan. This term does not include overpayments caused by untimely or inaccurate eligibility information. Participant: Employee or dependent who is covered by the Plan. PHI: Any information We receive or provide on behalf of the Plan which is considered Protected Health Information as the term is defined in the privacy regulations of the Health Insurance Portability and Accountability Act of 1996. Plan: The plan to which this Agreement applies, but only with respect to those provisions of the plan relating to the Self-funded health benefits We are administering, as described in the Summary Plan Description. Plan Administrator: The current or succeeding person, committee, partnership, or other entity designated the Plan Administrator who is generally responsible for the Plan's operation. Proprietary Business Information: Information about Your business or Our business that is confidential, proprietary, trade secret or is not readily available to the general public; or, information that has been designated by You or Us as confidential or proprietary. Proprietary Business Information may be referred to as "Your Proprietary Business Information" or "Our Proprietary Business Information", as applicable, throughout this Agreement. Our Proprietary Business Information shall include, but not be limited to, financial provisions related to prescription drug products covered under the medical benefit. Rebates: All rebates, discounts or other financial incentives (whether access, base, Prescription Drug List (PDL), incentive, market share, volume, or other), administrative fees, and any interest thereon which We receive from an intermediary that contracts on Our behalf ("Intermediary"), or directly, and are obtained in connection with prescription drug products dispensed to Participants under the Plan's medical benefit under this Agreement. Rebates do not include any amounts retained by an intermediary as compensation for its services or any purchasing discounts obtained by an intermediary or specialty pharmacy when purchasing drug products for distribution. Rebates to customers are administered and paid under the medical benefit plan as outlined in this Agreement. Self-Fund or Self-Funded: Means that You, on behalf of the Plan, have the sole responsibility to pay, and provide funds, to pay for all Plan benefits. We have no liability or responsibility to provide these funds. This is true even if We or Our affiliates provide stop loss insurance to You. Standard of Care: In providing all services set forth in this Agreement, we shall use the care, skill, prudence and diligence under the circumstances then prevailing that a prudent claims administrator acting in a like capacity and familiar with such matters would use. Employee Benefit Booklet: The document(s) You provide to Plan Participants describing the terms and conditions of coverage offered under the Plan. Systems: Means the systems We own or make available to You to facilitate the transfer of information in connection with this Agreement. Tax or Taxes: A charge imposed, assessed or levied by any federal, state, local or other governmental entity. Urgent Care Claims: A claim for medical services and supplies which meets ERISA's definition of Urgent Care Claim. Section 2 - Employee Benefit Plan: Your Responsibilities Section 2.1 Responsibility for the Plan. We are not the Plan Administrator of the Plan. Any references in this Agreement to Us "administering the Plan" are descriptive only and do not confer upon Us anything beyond certain agreed upon claim administration duties. Except to the extent this Agreement specifically requires Us to have the fiduciary responsibility for a Plan administrative function, You accept total responsibility for the Plan for purposes of this Agreement including its benefit design and compliance with any laws that apply to You or the Plan, whether or not You or someone You designate is the Plan Administrator. Section 2.2 Plan Consistent with the Agreement. You represent that Plan documents, including the Employee Benefit Booklet as described in Section 4.19, are consistent with this Agreement. Nevertheless, before distributing any communications that change the Plan benefits or provisions to Participants or third parties, You will provide Us with copies of the Employee Benefit Booklet and Employee communications which refer to Us or Our services prior to distributing these materials to Employees or third parties. You will amend them if We reasonably determine that references to Us are not accurate; or any Plan provision is not consistent with this Agreement or the services that We are providing. Section 2.3 Plan Changes. You must provide Us with notice of any changes to the Plan or Employee Benefit Booklet within a reasonable period of time prior to the effective date of the change to allow Us to determine if such change will alter the services We provide under this Agreement. Any change in the services to be provided by Us under this Agreement which would be caused by any such Plan changes must be mutually agreed to in writing prior to implementation of such change. We will notify You if (i) the change increases Our cost of providing services under this Agreement or (ii) We are reasonably unable to implement or administer the change. If the parties cannot agree to a new fee within (30) thirty days of the notice of the new fee or if We notify You that We are unable to reasonably implement or administer the change, We shall have no obligation to implement or administer the change, and You may terminate this Agreement upon (60) sixty days written notice. Section 2.4 Affiliated Employers. You represent that together You and any of Your affiliates covered under the Plan make up a single "controlled group" as defined by the IRC. You agree to provide Us with a list of Your affiliates covered under the Plan upon request. Section 3 - Your Other Responsibilities Section 3.1 Eligibility Information. You will tell Us which of Your Employees, their dependents and/or 'other persons are Participants. This information must be accurate and provided to Us in a timely manner and in an agreed upon format. You will notify Us of any change to this information as soon as reasonably possible. We will be entitled to rely on the most current information in Our possession regarding eligibility of Participants in paying Plan benefits and providing other services under this Agreement. We will not be required to make retroactive eligibility changes going back more than 120 days that require Us to process or reprocess claims, but if We agree to do so, additional fees may apply. Any charges would be disclosed to You and mutually agreeable to both parties prior to being incurred. Section 3.2 Notices to Participants. You will give Participants the information and documents they need to obtain benefits under the Plan within a reasonable period of time before coverage begins. In the event this Agreement is discontinued, You will notify all Participants that the services We are providing under this Agreement are discontinued. Section 3.3 Escheat. You are solely responsible for complying with all applicable abandoned property or escheat laws, making any required payments, and filing any required reports. Section 3.4 Claims by Other Parties. In the event a third party pursues a claim against Us as the claims administrator (e.g. a claim raised by the federal government based on the federal Medicare Secondary Payor laws), and to the extent allowed by Texas law, You will indemnify and hold Us harmless with respect to 4 such third party claim, including all costs in defending against any allegation or handling such claim, except as otherwise indicated in Section 12.2. This provision shall survive the termination of this Agreement. Section 4 - Services Provisions Section 4.1 Claims Processing. Claims for Plan benefits must be submitted in a form that is satisfactory to Us in order for Us to determine whether a benefit is payable under the Plan's provisions. In applying the Plan's provisions, We will use claim procedures and standards that We develop for benefit claim determination. You delegate to Us the discretion and authority to use such procedures and standards. The rate of accuracy of benefit payments shall be consistent with the accuracy rate that a reasonably prudent claims administrator would be expected to achieve under similar circumstances. Section 4.2 Benefit Determination and Appeals. You appoint Us a named fiduciary under the Plan with respect to (i) performing initial benefit determinations and payment, (ii) performing the fair and impartial review of first level appeals, and (iii) performing the fair and impartial review of second level appeals. As such, You delegate to Us the discretionary authority to (i) construe and interpret the terms of the Plan, (ii) to determine the validity of charges submitted to Us under the Plan, and (iii) make final, binding determinations concerning the availability of Plan benefits. If it is determined that a benefit is payable, We will issue a check for, or otherwise credit the benefit payment to the appropriate payee. If We deny a Plan benefit claim, the claimant shall have the appeal rights set forth in the Employee Benefit Booklet, and/or which are required under applicable law. If We determine that all or a part of the benefit is not payable under the Plan, We will notify the claimant of the adverse benefit determination and of the claimant's right to appeal the adverse benefit determination. This notification will be designed to comply with applicable requirements for adverse benefit determination notices. If, after the exhaustion of the two levels of appeal with Us, We determine that the Plan benefit is still not available, We will notify the claimant that the adverse benefit determination has been upheld. This notice will be designed to comply with the applicable requirements for adverse benefit determination notices. This determination will be final and binding on the claimant, and all other interested parties. Appeals of Urgent Care Claims Notwithstanding the foregoing, with respect to Urgent Care Claims, We will conduct one review of a denied Urgent Care Claim and issue a final determination as soon as possible but not later than 72 hours from receipt of the request to appeal. Section 4.3 Managed Care Network Services. We will make a Managed Care Network available to Participants. The network will be located in mutually agreeable geographical sites with Network Providers who render health care and/or mental health and substance abuse care. We will maintain directories of Network Providers, and will periodically update such directories on Our telephonic and online systems. The make-up of the Managed Care Network can change at any time. Notice will be given in advance or as soon as reasonably possible. We will maintain a grievance process so that Participants may obtain assistance with, and express their opinions about, their use of the Managed Care Network. We do not employ Network Providers and they are not Our agents or partners. Network Providers participate in Managed Care Networks only as independent contractors. Network Providers and the Participants are solely responsible for any health care services rendered to Participants. We are not responsible for the medical outcomes or the quality or competence of any provider or facility rendering services, including Network Pharmacies, or the payment for services rendered by the provider or facility. Section 4.4 Health Care Medical Management Services. We will provide Our Care Coordinations"' services in accordance with the provisions contained in this section. The Care CoordinationsM program focuses on offering education, accelerating access to care and providing surveillance and monitoring of chronic conditions. Our Care CoordinationsM services include the review of Participants' diagnosis and proposed health care treatments with respect to whether or not the service is appropriate to treat the condition. The services are designed to facilitate Participant education, identify and prevent delays in treatments, and provide intervention with respect to Participants' health care needs that are highly likely to drive utilization and medical expenses of the Plan. We will review health care services and supplies to determine whether they are covered services under the Plan. If We determine that services or supplies are not covered under the Plan, then We will provide the appeal services outlined in Section 4.2 of the Agreement. Section 4.5 Health Care Case Management Services. We may provide, when appropriate for the individual Participant, certain case management services. These services are designed to provide a proactive, systematic process of health care coordination, including the evaluation of inpatient, outpatient and ancillary services, Participant education, the review of the short term outpatient care needs and where appropriate, coordination and facilitation of discharge planning needs. The above services address the unmet health care needs of Participants who are not eligible for a disease management program under the Plan but are at significant risk for declining health status and high medical expenses. We also provide an Alternative Care Proposal program (ACP) which offers benefit coverage for certain health care services. We have designed this program for the diagnosis and/or treatment of a particular Participant's illness or injury. It provides appropriate and cost effective health care services and supplies alternatives that would otherwise not be covered by the Plan. The Plan will pay for and cover as Plan benefits the health care services and supplies contained in the ACP program. You consent to Our use and administration of the ACP program and delegate to Us the discretion and authority to develop and revise ACPs. We will work with Participants who satisfy the criteria for participation in case management services to develop a program of benefit coverage with appropriate and cost-effective health care services and supplies for the diagnosis and/or treatment of the Participant's condition. If the Participant and health care provider are not willing to participate in the process, We will not provide these services. Section 4.6 Transplant Benefit Management Services. Your Plan has agreed to adopt Transplant Benefit Management Services, as described below. U.R.N. Transplant Network Access. We agree to provide You access to a network of credentialed transplant programs. Transplant services rendered by those facilities, and the discounted rates for those services, are available to You based upon the contractual relationship between Our affiliate, United Resource Networks (U.R.N.) and the facilities contained within the U.R.N. Transplant Network. Access to these relationships is made available to all Participants who need transplant- related services. U.R.N. determines what transplant programs are qualified for participation in the U.R.N. Transplant Network and will provide You with a list of those programs. The list of participating programs changes from time to time and You and the Participants may view an updated list on the U.R.N. client website or request that a current list be provided by U.R.N. You agree to amend the Plan consistent with the changes made to the list of participating programs within a reasonable period of time after notice is given. The following services and supplies offered by a participating transplant program are typically included in the U.R.N. Transplant Network contractual relationship: evaluation of the Participant for transplant; donor searches; organ acquisition and procurement; hospital and physician fees; transplant procedures; and follow-up care for a period up to one year after the transplant. You agree that the Plan will pay for and cover as Plan benefits the services and supplies rendered to Participants in a participating program in accordance with this section. You delegate to Us the discretion and authority to approve for payment under the Plan those services and supplies rendered to Participants for transplant services rendered at participating programs. Transplant services rendered at programs that do not participate in the U.R.N. Transplant Network are not eligible for coverage under the Plan. U.R.N. is not responsible for the medical outcomes of any provider or facility rendering services, or the payment for services rendered by the provider or facility. Section 4.7 Cancer Resource Services. We agree to provide eligible Plan Participants access to a network of providers for Oncology Services. The term "Oncology Services" as used in this section includes health care services and supplies rendered for the treatment of a condition that has a primary or suspected diagnosis relating to oncology. Oncology Services rendered by these providers, and the discounted rates for these services, are available to You based on the contractual relationship between Our affiliate, United Resource Networks (U.R.N.), and these providers. You agree that the Plan will pay for and cover as Plan benefits Oncology Services, which includes supplies, rendered to Participants in accordance with this section. You delegate to Us the discretion and authority to reprice claims for Oncology Services and approve for Plan payment services and supplies rendered to Plan Participants under this Section.. Section 4.8 Neonatal Resource Services. We, through Our affiliate, United Resource Networks (U.R.N.) will provide Neonatal Resource Services ("NRS") to eligible Participants. NRS may include access to registered nurses with training and experience in neonatal care for evaluation and coordination of neonatal care plans and NICU facilities, discharge planning, post-discharge support, resources for parents and families of neonates, and integration with other applicable care management programs We provide to You as set forth in this Agreement. Section 4.9 Kidney Resource Services. We, through Our affiliate, United Resource Networks (U.R.N.) will provide Kidney Resource Services ("KRS") to eligible Participants. KRS may include access to specialized consulting services to eligible Participants with end-stage renal disease or chronic kidney disease, as well as access to a network of dialysis centers. Section 4.10 Claim Recovery Services. We will provide recovery services for Overpayments. We will reimburse you for, and you will not be responsible for recovery costs associated with any Overpayments made by us due to our failure to act in accordance with the Standard of Care as determined by a court or other tribunal having jurisdiction of the matter. Section 4.11 Third Party Liability Recovery. We will provide services to recover Plan benefits that were paid and are recoverable by the Plan because payment was or should have been made by a third party for the same medical expense (other than in connection with coordination of benefits, Medicare, or other Overpayments). This is referred to as "Third Party Liability Recovery" (or "subrogation'). You will not engage any entity except Us to provide the services described herein without Our prior approval. Section 4.12 General Provisions Applicable to Sections 4.10 and 4.11. You will be charged fees when any of the services described in Sections 4.10 and 4.11 are provided by Us through a subcontractor or affiliate, as set forth in Exhibit A. The fees are deducted from the actual recoveries. You will be credited with the net amount of the recovery. We will provide You with a written notice of the basis of the fees for which You are charged and, advance notice of any material changes in such fees or Our recovery services. You delegate to Us the discretion and authority to develop and use standards and procedures for any recovery under Sections 4.10 and 4.11, including but not limited to, whether or not to seek recovery, what steps to take if We decide to seek recovery, and the circumstances under which a claim may be compromised or settled for less than the full amount of the claim. You acknowledge that use of Our standards and procedures may not result in full or partial recovery for any particular case. We will not pursue any recovery if it is not permitted by any applicable law, or if recovery would be impractical. In some instances, We may be able to obtain overpayment recoveries by applying (or offsetting) the overpayment against future payments to the provider made by Us. In effectuating overpayment recoveries through offset, We will follow Our established overpayment recovery rules which include, among other 7 things, the prioritization of overpayment credits based on the age of the overpayment in Our system and funding type. In Our application of overpayment recovery through offset, timing differences may arise in the processing of claims payments, disbursement of provider checks, and the recovery of overpayments. As a result, a plan may in some instances receive the benefit of an overpayment recovery before We actually receive the funds from the provider. Conversely, We may receive the funds before a Plan receives the credit for the overpayment. It is hereby understood that the parties may retain any interest that accrues as a result of these timing differences. Details associated with overpayment recoveries made through offset will be identified in the monthly reconciliation report provided to the designated representative for Your Plan. We may initiate litigation to recover payments, but We have no obligation to do so. If We initiate litigation, You will cooperate with Us in the litigation. If this Agreement terminates, or, if Our recovery services terminate, We can continue to recover any payments We are in the process of recovering. The appropriate fees will continue to be deducted from the actual recovery, when and if a recovery is obtained. Section 4.13 Abuse and Fraud Management. We or Our affiliate will provide services related to the detection, prevention, and recovery of abusive and fraudulent claims. Our Abuse and Fraud Management processes will be based upon Our proprietary and confidential procedures, modes of analysis and investigations. We will use these procedures and standards in delivering Abuse and Fraud Management services to You and Our other customers. These procedures and standards include, but are not limited to: whether or not to seek recovery, what steps to take if We decide to seek recovery, and under what circumstances to compromise a claim or settle for less than the full amount. You delegate to Us the discretion and authority to use such procedures and standards, including the authority to undertake actions, including legal actions, which have the largest impact for the largest number of customers. You acknowledge that the use of these procedures and standards may not result in full or partial recovery or in full recovery for any particular case. We do not guarantee or warranty any particular level of prevention, detection, or recovery. We agree to perform Abuse and Fraud Management services pursuant to the industry standards for such services. For each fraud and abuse recovery, a fee will apply as set forth in Exhibit A. This fee includes all work to identify recovery opportunities, research, conduct data analysis, investigate, negotiate settlements without the use of outside counsel, draft legal documents, and We will credit the recovery amount to You. If outside counsel is retained for a group of payers seeking the recovery, a proportionate amount of the outside legal fees, equal to the payer's exposure in the case to the total exposure in the case, will be deducted from the gross recovery amount, after the fee has been deducted. You will be given the option to participate or decline participation in the settlement. If this Agreement terminates, or if Our claim recovery services terminate, We can elect to continue fraud and abuse recoveries that are in progress, and the fees will continue to apply. Section 4.14 Assistance with General Plan Administration. We will provide administrative services including (i) administration forms and service orientation, (ii) a toll-free customer service telephone line for Participants, (iii) enrollment support, and (iv) identification cards for Participants. Custom services, such as special forms or administrative support that exceeds the level standardly offered to Our self-funded customers will be subject to an additional fee determined by Us. Any additional charges will be revealed and mutually agreed to by both parties prior to an invoice being generated. We will provide You with Our standard reports for self-funded customers. You may request that We provide additional reports. If We agree to provide them, an additional cost may apply. If reports are provided through Our Systems, We further reserve the right, from time to time, to change the content, format and/or type of Our standard reports You may request that We provide services in addition to those set forth in this Agreement. If We agree to provide them, those services will be governed by the terms of this Agreement, unless otherwise specified in an amendment to this Agreement. You will pay an additional fee, determined by Us, for these additional services. Section 4.15 Employee Benefit Booklet. We will prepare a customized draft of a Employee Benefit Booklet necessary for each plan ("EBB"). For purposes of this provision, plan means each individual plan design administered by Us. We will provide reasonable number of drafts, in response to Your comments, and a final draft EBB in electronic form. The EBB will be in English. We will print each EBB in Our standard size and with Our standard cover in a quantity equal to 110% of the number of Employees participating in the plan, and ship to a single location. You agree to distribute these EBBS in accordance with applicable laws. You will also furnish additional EBB information as may be required under applicable laws. You will be responsible for the legal sufficiency of the EBB, including any legally required information. Section 4.16 Electronic Standard Transactions. We will comply with all applicable provisions of the Standards for Electronic Transactions Regulation (the "Standards"). We will also require any of Our contractors, subcontractors, or other agents that assist Us in conducting standard transactions to comply with the Standards in writing. We will not (i) change the definition, data condition, or use of a data element or segment as prohibited in the Standards, (ii) add any data elements or segments to the maximum defined data set as prohibited in the Standards, (iii) use any code or data elements that are either marked "not used" in the Standards' implementation specification or are not in the Standards' implementation specification(s), or (iv) change the meaning or intent of the Standards' implementation speciftcations(s). Section 4.17 Health Insurance Portability and Accountability Act of 1996. We will produce Certification of Coverage forms for Participants who have lost or lose coverage under the Plan on or after the Effective Date of this Agreement, as required by the Health Insurance Portability and Accountability Act of 1996 (HIPAA). This certification will be based on eligibility and termination data that You will provide Us in accordance with Our data specifications. The Certification of Coverage forms will only include periods of coverage for which We have administered the Plan. The Certification of Coverage forms will be based only on data that is currently indicated and available to Us in Our eligibility systems as of the date that the form is generated. We will give You reasonable advance notice of all additional data requirements for form completion and You agree to provide that information on a timely basis. We reserve the right to discontinue providing this service if You do not provide the data We request in a timely manner. Section 4.18 Medical Benefit Drug Rebate Payments. From time to time, We or an intermediary may negotiate with drug manufacturers regarding the payment of medical benefit Rebates on applicable prescription drug products dispensed to Participants under the Plan's medical benefit under this Agreement. You will receive 80% of the medical benefit Rebates We receive in connection with prescription drug products dispensed to Participants under the Plan's medical benefit under this Agreement. We will retain the balance of such medical benefit Rebates as part of Our compensation under this Agreement. If We are not able to make payment to You within thirty (30) calendar days of Our receipt of medical benefit Rebates, We will pay interest on medical benefit Rebates We receive from the 31st calendar day forward after Our receipt of the medical benefit Rebates, until We pay You Your medical benefit Rebates. We will pay medical benefit Rebates to You no less than annually. Interest will be paid at the one month London Interbank Offered Rate (LIBOR) in effect as of the date We pay You. We will retain any interest earned up to the thirty (30) calendar day point, and upon Your request, We will provide information on the amount of such interest. You will only receive Your medical benefit Rebates to the extent that medical benefit Rebates are actually received by Us. Thus, for example, if a government action or a major change in pharmaceutical industry practices prevents Us from receiving medical benefit Rebates, the amount You receive may be reduced or eliminated. You agree that during the term of this Agreement, neither You nor the Plan will negotiate or arrange or contract in any way for medical benefit Rebates on or the purchase of prescription drug products from any manufacturer under the Plan's medical benefit under this Agreement. In the event You or the Plan negotiates or arranges or contracts with a drug manufacturer for medical benefit Rebates on or the purchase of 9 prescription drug products under the Plan's medical benefit, under this Agreement We may, without limiting Our right to other remedies, immediately terminate Your and Plan's entitlement to medical benefit Rebates (including forfeiture of any medical benefit Rebates earned but not paid) under this Agreement. In addition, to reasonably cooperate with Us in order to obtain medical benefit Rebates, You agree to reasonable requests related to obtaining medical benefit Rebates that We may communicate to You from time to time. Intermediary Compensation: If an intermediary is involved in negotiating with drug manufacturers regarding the payment of medical benefit Rebates on applicable prescription drug products dispensed to Participants under the Plan's medical benefit under this Agreement, it may retain a portion of the gross amounts received from drug manufacturers in connection with such products. We will provide information on the amount retained by the intermediary as compensation for its services, in advance of Your execution of this Agreement, which information is Our Proprietary Business Information under the terms of this Agreement. In addition, We will provide You with thirty (30) days advance notice of any material increase in intermediary compensation or material changes in the method for intermediary compensation. If at any time You do not find the intermediary compensation acceptable, You may terminate the medical benefit Rebates services under this Agreement after thirty (30) days advance written notice to Us in accordance with the notice provisions of Section 15.7 of this Agreement. Section 4.19 Facility Reasonable Charge Determination and Negotiation Reductions. We will evaluate certain facility-billed charges which may exceed reasonable charges under the terms of the Plan We will, negotiate with the facility as needed for reduction of billed charges in accordance with appropriate guidelines. The additional charge for this service is described in Exhibit A. We can terminate the Facility Reasonable Charge program in whole or in part at any time for any reason. In the event of termination, We can elect to continue any reviews and negotiations that are in progress at the time of termination. The additional service charge described in Exhibit A will continue to apply. Section 4.20 Shared Savings Program. For the service fee specified in Exhibit A, We may make Our Shared Savings Program available to some or all of Your Plan Participants. This program provides access to discounted charges made available to Us from health care providers who contract with, or will negotiate with, a third party to provide such discounted charges. The amount payable under discounted portions of the Plan will be based on the Shared Savings Plan's discounted charges. If a Participant is enrolled in a network plan and receives services from a Network Provider benefits payable for that provider's services will be based on the applicable rates for fees included in Our agreement with that provider. These benefits will not be included in the calculation of the "Savings Obtained" under the Shared Savings Programs, and the service fee for the Shared Savings Program will not apply to these benefits. You understand that the services under this program provide access to provider discounts only. These providers are not part of Our Managed Care Network. Therefore, Our services under this program do not include credentialing of providers or other Managed Care Network services. We are not responsible for the medical outcomes or the quality or competence of any provider or facility rendering services under the Shared Savings Program. We can terminate all or part of the Shared Savings Program at any time for any reason. You can terminate the program at any time for any reason by giving Us written notice. We will implement the termination within a reasonable period of time after receiving the notice. Section 4.21 Optum Management Programs. We will provide Participants with access to various publications that are amended from time to time, and Optum NurseLine, a 24-hour service staffed by registered nurses providing the following services via telephone or an audio health information library: general health information and identification of specific health related concerns, as well as provision of educational information regarding those concerns. Section 4.22 Stop Loss Program. You understand that it is Your responsibility to detect claims that may be covered by a third party stop loss carrier policy purchased by You. We will produce and send a report of 10 the total medical dollars paid for any claimant exceeding 50 percent of the Individual Stop Loss (ISL) threshold. The report will include policy year to date claims paid through the end of the previous month. These categories are subject to change upon notice to You and include (i) Our standard third party interface detailed claim report for each claimant identified, (ii) Our completed claim questionnaire, which includes coordination of benefits and authorization information, preexisting condition and subrogation information, (iii) list of services subject to United Resource Network negotiations or discounts, if applicable, (iv) Medicare status of claim (e.g., primary or secondary), (v) a listing of any alternative care proposals, as that term is further described in Section 4.5, and (vi) copies of submitted charges. You and Your third party stop loss carrier must execute Our standard nondisclosure and indemnification agreement prior to Our providing any of the above information. Section 4.23 Access to Participant EOB Information. We will make access to participant EOB information available to You through Our employer portal, in accordance with this Section. To the extent You choose to access such information, You delegate to Us the discretion and authority to develop and use standards and procedures for providing You with such access under this Amendment. Prior to accessing participant EOB information, You agree to obtain and maintain any individual authorizations that may be required in accordance with applicable law, including, but not limited to, HIPAA, federal laws governing the confidentiality of substance abuse and mental health records, and state laws governing the confidentiality of categories of sensitive information, such as HIV, sexually transmitted disease and genetic testing. In addition, You agree to obtain and maintain any required individual authorizations for both subscribers and their dependents, as required by applicable law. You acknowledge that in order for the Plan or its designee to lawfully disclose PHI to You, acting as Plan Sponsor, the Plan must fully comply with the HIPAA privacy regulations. You further acknowledge that appropriate steps have been taken for the Plan to be in full compliance with the HIPAA privacy regulations, including but not limited to, the maintenance of a Privacy Notice to be distributed upon request by an Individual. You represent, warrant and certify that the Plan has amended both its plan documents and its privacy notice, in accordance with HIPAA, to include specific provisions referencing Your available access to participant EOB information. You also represent, warrant and certify that You have not delegated the function of enrollee advocacy to Us. Upon Our request, You agree to deliver to Us copies of Your amended plan documents, privacy notice, and any individual authorizations that You have obtained and maintained, as well as any other relevant documentation, to evidence Your compliance with applicable law and this Agreement. You agree to hereby release Us from any contractual liability, arising directly or indirectly, out of the Business Associate Agreement between the Parties and arising directly or indirectly from Customer's access to participant EOB information on the employer portal. Further, to the extent allowed by Texas law, You will also agree to defend, indemnify and hold Us harmless against any and all claims, liabilities, judgments or damages asserted against, imposed upon or incurred by Us that arise out of any violation of this Section. Section 4.24 Employee Health Management Services. We will provide employee health management services independently or through a third party contracted entity. These services are designed to (i) provide a mechanism for Participants to assess their own health and wellness and risk areas, and (ii) provide tools, information, and health coaching programs to manage potential risk areas. Employee Health Management services may include Online Health Assessment, Communications CONTENT, Program Brochure, Telephonic-Based Interventions, Online Interventions, Program Management/Reporting, Program Implementation, Incentive Management, or Claims Analysis for ROL We can terminate Our provision employee health management services in whole or in part at any time for any reason if such termination applies to all of Our similarly situated customers. You may elect ad hoc services during the term of Your Employee Health Management program participation. Additional fees may apply for such ad hoc services. Section 5 - Service Fees Section 5.1 Service Fees. You will pay Us fees for Our services. The service fees listed in Exhibit A of this Agreement are effective for the Agreement Period shown in the Exhibit. In addition to the service fees specified in Exhibit A, You must also pay Us any additional fee that is authorized by a provision elsewhere in this Agreement or is otherwise agreed to by the parties. Section 5.2 Changes in Service Fees. We can change the service fees on each Agreement Period anniversary. We will provide You with thirty (30) days prior written notice of the revised service fees for subsequent Agreement Periods. Any such service fee change will become effective on the later of the first day of the new Agreement Period or thirty (30) days after We provide You with written notice of the new fees. We also can change the services fees (i) any time there are changes made to this Agreement or the Plan, which affect the fees, (ii) when there are changes in laws or regulations which affect the services We are providing, or will be required to provide, under this Agreement, (iii) if the number of Employees covered by the Plan or any Plan option changes by ten percent (10%) or more, or (iv) if the average contract size, defined as the total number of enrolled Participants divided by the total number of enrolled Employees, varies by 10% or more from the assumed average contract size of 2.46. Any new service fee required by such change will be effective as of the date the changes occur, even if that date is retroactive. If You do not agree to any change in service fees, You may terminate this Agreement upon thirty (30) days written notice after You receive written notice of the new fees. You must still pay any amounts due for the periods during which the Agreement is in effect. Section 5.3 Due Dates, Payments, and Penalties. In some cases, We will bill You for the amounts that You owe or We estimate You owe Us. In these cases, the amounts owed are due and payable on the Due Date shown on the bill. In other cases, We will provide You with advance statements in advance that You complete and either send to Us or verify through electronic acknowledgement. For advance statements, the Due Date for payment is the first day of the next calendar month. Late Payment: If amounts owed are not paid within fifteen (15) days after their Due Date ("Grace Period"), You will pay Us interest on these amounts at the interest rate that We charge to Our self-funded customers. You agree to reimburse Us for any costs that We incur to collect these amounts. Our decision to provide You with a Grace Period will be based on Our assessment of Your financial condition, as of the Effective Date, and Your compliance with material financial obligations. If We determine, based on reasonable information and belief, that Your financial condition has deteriorated, or You continue to fail to comply with the material financial obligations specified in this Agreement, We may remove the Grace Period upon notice to You and reserve the right to either charge interest on payments not received after the Due Date or terminate the Agreement if payments are not received by the Due Date. Section 5.4 Reconciliation. For each Agreement Period, We will reconcile the total amounts You paid with the total amounts You owed. If the reconciliation indicates that We owe You money, Your next payment will be credited. If the reconciliation indicates that You owe Us money, We will invoice You for the amount due. The Due Date for these amounts is the first day of the next calendar month. You will pay Us within thirty (30) days after receiving notice of the amounts that You owe Us. For payments made after this thirty (30) day period, You will pay Us interest on these amounts at the interest rate that We charge to Our other self-funded customers. If the Agreement is terminated, We will pay You the amount owed within thirty (30) days after We perform a final reconciliation. If the final reconciliation indicates that You owe Us money, You will pay Us within thirty (30) days after receiving notice of the amount owed. For payments You make after thirty (30) days of receiving notice of the amounts that You owe Us, We will charge interest at the interest rate that We charge Our other self-funded customers. 12 Section 5.5 Initial Implementation Costs. In implementing Our Plan administration services, We incur costs which reflect Our investment in establishing and maintaining a long-term business relationship with You. The service fees attributable to the initial Agreement Period are set forth in Exhibit A and incorporate these implementation costs. Section 6 - Providing Funds for Benefits Section 6.1 Providing Funds for Benefits. The Plan is Self-Funded. You are solely responsible for providing funds for payment for all Plan benefits payable to Participants, Network Providers, or non- Network Providers. Section 6.2 Bank Account. We under Your employer identification number, will open and maintain a Bank Account at the Bank to provide Us the means to access Your funds for the sole purpose of payment of Plan benefits, expenses and fees. The Bank Account will be a part of the network of accounts that have been established at the Bank for Our self-funded customers. The funds in the Bank Account are Yours. Section 6.3 Balance In Account. You will maintain a minimum balance in the Bank Account in an amount equal to not less than six (6) days of expected Bank Account activity. We will establish this amount based on expected Plan benefit payments, with appropriate adjustments for anticipated non-daily activity (e.g., prescription drug benefits and administrative fee payments) as determined by Us. We will determine if circumstances warrant increasing this minimum balance, and will notify You if and when the required balance or the amount identified above changes. The required minimum balance is based on Your financial condition as assessed by Us. In the event We determine, based on reasonable information and belief, that Your financial condition has deteriorated or You continue to fail to comply with the material financial obligations specified in this Agreement, We may revise the required balance effective five (5) days from the date of notice. Section 6.4 Issuing and Providing Funds for Checks and Non-Draft Payments. The checks We write and issue to pay Plan benefits under this Agreement will be written on one or more common accounts that are a part of the network of accounts maintained at the Bank for Our self-funded customers. When the checks for Plan benefits are presented to the Bank, the Bank will notify Us and We will direct the Bank to accept or reject the checks and direct the Bank to withdraw funds from the Bank Account to fund the checks that are cashed. The non-draft payments We issue to pay Plan benefits under this Agreement will be paid from one or more common accounts that are a part of the network of accounts maintained at the Bank for Our customers. We will direct the Bank to withdraw funds from the Bank Account to fund the non-draft payments as they are- issued. Section 6.5 Transfers of Funds. Funds will also be withdrawn from the Bank Account when a transfer of funds We made to pay Plan benefits is completed, such as when an electronic funds transfer has been made to a health care provider to pay benefits under the Plan. Section 6.6 Service Fees and Other Expenses. Funds will also be withdrawn from the Bank Account on the due date of any service fees which You have authorized to be paid to Us and for the payment of other Plan expenses such as state surcharges or assessments. Section 6.7 Calls for Funds. The withdrawals for Plan benefits and service fees are paid for by the balance You maintain in the Bank Account. Every five (5) business day(s), You will transfer to the Bank Account the amount of funds which have been withdrawn from the Bank Account over the past five (5) business day(s). You will transfer that amount using a method agreed upon by You, Us and the Bank. This transfer will replenish Your balance in the Bank Account. The number of days between transfers and the method of transfer are based on Your financial condition as of the Effective Date as assessed by Us, as well as Your compliance with material financial obligations. We reserve the right to increase the frequency of such fund transfers and/or change the method of transfer if We determine, based on reasonable information and belief, that Your financial 13 4- condition has deteriorated, or You continue to fail to comply with the material financial obligations specified in this Agreement. Section 6.8 Underfunding. If You do not provide the amounts sufficient to maintain the required minimum balance in the Bank Account, or to cover Bank Account withdrawals: (1) You must immediately correct the deficiency and provide prompt notice to Us in either event. (2) If We learn of the funding deficiency, We will notify You so You can correct the deficiency. (3) You agree that We may stop issuing checks and non-draft payments and suspend any of Our other services under this Agreement for the period of time You do not provide the required funding. (4) If You do not make the required payment(s) to correct the funding deficiency, We may terminate this Agreement effective as of any date following one business day after We provide notice of the funding deficiency. At Your expense, We may also place stop payments on checks if We determine that You have insufficient funds in Your corporate funding bank account to honor such checks. You will pay interest on the amount of underfunding at the standard rate that We charge to Our self-funded customers for underfunding of bank accounts. The notice provisions contained in Termination Events, Section 8. 1, do not apply to this breach. At the end of each claims processing time period, We will notify You of the amount needed to pay claims processed and fees that are due. Upon notice to You of the amount due for claims processed and fees that are due, You will fund the designated amount(s) within one business day via Automated Clearing House (ACH) transfer to the designated Bank Account for payment of Plan benefits. You will initiate the fund transfers unless We determine that Your financial condition as of the Effective Date, as assessed by Us, has deteriorated or You fail to comply with the material funding and financial obligations specified in this Agreement. If either condition occurs, You agree to authorize Us to initiate the transfers. You will authorize Us to initiate Automated Clearing House (ACH) transfers from Your corporate funding bank account to the Bank Account for payment of Plan benefits. At the end of each claims processing period, We will within one business day, Automated Clearing House (ACH), initiate transfers from Your designated corporate funding bank account to the Bank Account in an amount necessary to pay Plan benefits. Section 6.9 Outstanding Checks. We will send a search letter to the payee on all checks that have not been cashed within six (6) months. We will stop payment on all checks We have issued under this Agreement that have not been cashed within twelve (12) months and provide You with reports You need for the purpose of performing escheat. Section 6.10 Termination of Agreement. When this Agreement terminates, the funding method for Plan benefits will remain in place for a limited period of time. That time period will be dependent upon run-out administration. After this period, that funding method will cease. You will then deposit and maintain in the Bank Account enough funds to cover all checks for Plan benefits that have been issued but not cashed. This balance will remain in the Bank Account for a limited period of time to fund the outstanding checks. This period will be reasonable, as determined by Us, and applied on a consistent basis to Our self-funded customers. We will stop payment, on all checks that remain uncashed at the end of this period and You will request in writing to close the Bank Account and recover any funds remaining in it. We will provide bank statements and Bank Account reconciliation reports, including reports You need for the purposes of escheat. Section 7 - Term Of The Agreement Section 7.1 Services Begin. We will begin providing You claim processing services under this Agreement on the Effective Date. These services apply only to claims for Plan benefits that are incurred on or after the Effective Date. This Agreement will apply for an initial Agreement Period commencing on the Effective Date and will automatically continue for additional Agreement Periods, unless and until this Agreement is terminated. Section 7.2 Services End. Our services under this Agreement stop on the date this Agreement terminates, regardless of the date that claims are incurred. However, We may agree to continue providing certain services beyond the termination date, as provided in Section 8.2. 14 Section 8 - Termination Of The Agreement Section 8.1 Termination Events. This Agreement will terminate under the following circumstances: (i) The Plan terminates, (ii) Both parties agree in writing to terminate the Agreement, (iii) After the initial Agreement Period, We give You at least ninety (90) days prior written notice or You give Us at least thirty (30) days prior written notice, (iv) We give You notice of termination because You did not pay the fees or other amounts You owed Us when due under the terms of this Agreement, (v) You fail to provide the required funds for payment of benefits under the terms of this Agreement, (vi) Either party is in material breach of this Agreement, other than by non-payment or late payment of fees owed by You or the funding of Plan benefits, and does not correct the breach within thirty (30) days after being notified in writing by the other party, (vii) Any state or other jurisdiction prohibits a party from administering the Plan under the terms of this Agreement, or imposes a penalty on the Plan or Us and such penalty is based on the administrative services specified in this Agreement. In this situation, the party may immediately discontinue the Agreement's application in such state or jurisdiction. Notice must be given to the other party when reasonably practical. The Agreement will continue to apply in all other states or jurisdictions, or (viii) As otherwise specified in this Agreement. Section 8.2 Run-Out Administration. We will provide run-out claim processing services for a period of six (6) months following the Agreement's termination. This provision applies only to claims for health services incurred prior to the termination date. All other terms of this Agreement will apply to these post- termination services. However, We will not provide these services after the Agreement's termination, if the Agreement was terminated because You failed to pay Us fees due, You did not provide the funding required under Section 6.3, or when We terminate for any other material breach. The fee for run-out services, if applicable, will be determined at the time either party provides notice of termination. Section 8.3 Funding After Termination. When this Agreement terminates, the funding method for Plan benefits will remain in place for a limited period as determined by the parties. At the end of this period, We will place stop payments, at Your expense, on all checks that remain uncashed. Section 9 - Records, Information, Audits Section 9.1 Records. We will keep records relating to the services We provide under this Agreement for as long as We are required to do so by law. Section 9.2 Access to Information. If You need information in Our possession for purposes other than an audit, but in order to administer the Plan, We will provide You access to that information, if it is legally permissible, the information relates to Our services under this Agreement, and You give Us reasonable advance notice and an explanation of the need for such information. You represent that You have reasonable procedures in place for handling PHI, as required by law. You will only use or disclose PHI to administer the Plan, to perform under this Agreement, or as otherwise permitted under this Agreement. We will provide information only while this Agreement is in effect and for a period of six (6) months after the Agreement terminates, unless You demonstrate that the information is required by law or for Plan administration purposes. We also will provide reasonable access to information to an entity providing Plan administrative services to You, such as a consultant or vendor, if You request it. Before We provide PHI to that entity, the parties must sign a mutually agreed-upon confidentiality agreement, and the parties must agree as to what information is minimally necessary to accomplish the Plan administrative service. Section 9.3 Audits. During the term of the Agreement, and at any time within six (6) months following its termination, You or a mutually agreeable entity may audit Us once each calendar year to determine whether We are fulfilling the terms of this Agreement. Prior to the commencement of this audit, We must receive a signed, mutually agreeable confidentiality agreement. You must advise Us in writing of Your intent to audit. The place, time, type, duration, and frequency of all audits must be reasonable and agreed to by Us. All audits will be limited to information relating to the 15 calendar year in which the audit is conducted, and/or the immediately preceding calendar year. With respect to Our transaction processing services, the audit scope and methodology will be consistent with generally acceptable auditing standards, including a statistically valid random sample or other acceptable audit technique as approved by Us ("Scope"). You will pay any expenses that You incur in connection with the audit. In addition, You will be charged a reasonable per claim charge and a $1,000 charge per day for audits outside of the following parameters: (I) more than one audit per calendar year; (2) any on-site audit visit that is not completed within five (S) business days; (3) sample sizes exceeding the Scope specified above; or (4) any audit initiated after this Agreement has terminated. The additional fees cover the additional resources, facility fees, and other incremental costs associated with an audit that exceeds the Scope. In addition to Your expenses and any applicable fees, You will also pay any extraordinary expenses We incur in connection with the audit. For any audit initiated after this Agreement is terminated, You will pay all expenses incurred by Us. You will provide Us with a copy of any audit reports within 30 days after You receive the audit report(s) from the auditor. Section 9.4 Proprietary Business Information. Each party will limit the use of the other's Proprietary Business Information to only the information required to administer the Plan, to perform under this Agreement, or as otherwise permitted under this Agreement. Neither party will disclose the other's Proprietary Business Information to any person or entity other than to the disclosing party's employees, subcontractors, or representatives needing access to such information to administer the Plan, to perform under this Agreement, or as otherwise permitted under this Agreement. This provision shall survive the termination of this Agreement. Section 9.5 SAS 70 Reports. We may periodically provide You with Our SAS 70 report ("Report") for Your review in connection with Plan administrative purposes only. The Report is Our Proprietary Business Information and shall not be shared with any third parties without Our prior written approval; provided, however, that You can share the Report with: (i) Your independent public accounting firm; and /or (ii) Your consultants, provided that such consultants are not in any way a competitor of ours. To the extent that You do provide the Report to Your independent public accounting firm or a consultant as permitted herein, You shall require that they retain the Report as confidential and that they not disclose such Report to any other persons or entities. Section 9.6 PHI. The parties' obligations with respect to the use and disclosure of PHI are outlined in the Business Associate Addendum attached to this Agreement as Exhibit B. Section 10 - System Access Section 10.1 System Access. We grant You the nonexclusive, nontransferable right to access and use the functionalities contained within the Systems, under the terms specified in this Agreement. You agree that all rights, title and interest in the Systems and all rights in patents, copyrights, trademarks and trade secrets encompassed in the Systems will remain ours. To obtain access to the Systems, You will obtain, and be responsible for maintaining, at no expense to Us, the hardware, software and Internet browser requirements We provide to You, including any amendments thereto. You will be responsible for obtaining an Internet Service Provider or other access to the Internet. You will not (i) access Systems or use, copy, reproduce, modify, or excerpt any Systems documentation provided by Us in order to access or utilize Systems, for purposes other than as expressly permitted under this Agreement or (ii) share, transfer or lease Your right to access and use Systems, to any other person or entity which is not a party to this Agreement. You may designate any third party to access Systems on Your behalf, provided the third party agrees to these terms and conditions of Systems access and You assume joint responsibility for such access. Section 10.2 Security Procedures. You will use commercially reasonable physical and software-based measures, and comply with Our security procedures, as may be amended from time to time, to protect the System, its functionalities, and data accessed through Systems from any unauthorized access or damage 16 (including damage caused by computer viruses). You will notify Us immediately if any breach of the security procedures, such as unauthorized use, is suspected. Section 10.3 System Access Termination. We reserve the right to terminate Your System access (i) on the date You fail to accept the hardware, software and browser requirements provided by Us, including any amendments thereto or (ii) immediately on the date We reasonably determine that You have (i) breached, or allowed a breach of, any applicable provision of this Section 10 or (ii) materially breached or allowed a material breach of, any other applicable provision of this Agreement. Your System Access will also terminate upon termination of this Agreement, provided however that if run-out is provided in accordance with Section 8.2, You may continue to access applicable functionalities within the Systems during the run- out period. Upon any of the termination events described in this Agreement, You agree to cease all use of Systems, and We will deactivate Your identification numbers, passwords, and access to the System. Section 11 - Taxes And Assessments Section 11.1 Payment of Taxes and Expenses. In the event that any Taxes are assessed against Us as a claim administrator in connection with Our services under this Agreement, You will reimburse Us through the Bank Account for Your proportionate share of such Taxes (but not Taxes on Our net income). We have the authority and discretion to reasonably determine whether any such Tax should be paid or disputed. You will also reimburse Us for a proportionate share of any cost or expense reasonably incurred by Us in disputing such Tax, including costs and reasonable attorneys' fees and any interest, fines, or penalties relating to such Tax, unless caused by Our unreasonable delay or unreasonable determination to dispute such Tax. Section 11.2 Tax Reporting. In the event that the reimbursement of any benefits to Participants in connection with this Agreement is subject to Plan or employer based tax reporting requirements, You agree to comply with these requirements. Section 11.3 Surcharges. The Plan will remain responsible for state surcharges, assessments, or similar Taxes imposed by governmental entities or agencies on the Plan. Section 12 - Indemnification Section 12.1 You Indemnify Us. If a court of competent jurisdiction determines that You are liable for losses, liabilities, penalties, fines, costs, damages, and expenses, including reasonable attorneys' fees, which have been asserted against Us, which arose out of (i) Your gross negligence or willful misconduct in the performance of Your obligations under this Agreement, (ii) Your material breach of this Agreement, or (iii) a breach of any other agreements We enter into with third parties on Your behalf, You shall hold Us harmless and indemnify Us for Your proportionate share of any such liability, to the extent allowed by Texas Law. This provision shall survive the termination of this Agreement. Section 12.2 We Indemnify You. We will indemnify You and hold You harmless against any and all losses, liabilities, penalties, fines, costs, damages, and expenses, that You incur, including reasonable attorneys' fees, which arise out of (i) Our or Our vendors' gross negligence or willful misconduct in the performance of Our or Our vendors', subcontractors' or representatives' obligations under this Agreement or (ii) Our material breach of this Agreement, all as determined by a court or other tribunal having jurisdiction of the matter. Notwithstanding the foregoing, You will remain responsible for payment of benefits and Our indemnification will not extend to indemnification of You or the Plan against any claims, liabilities, damages, judgments or expenses that constitute payment of Plan benefits. This provision shall survive the termination of this Agreement. Section 13 - Plan Benefits Litigation Section 13.1 Litigation Against Us. We will select and retain defense counsel to represent Our and the Plan's interest if a demand is asserted, or litigation or administrative proceedings are begun by a Participant or health care provider against Us, or against the Plan and Us jointly, to recover Plan benefits, related to Our duties under this Agreement ("Plan Benefits Litigation"). All reasonable legal fees and costs We incur 17 will be paid by Us (except as provided in Section 12.1). To the extent that no conflict of interest exists, both parties will cooperate fully with each other in the defense of Plan Benefits Litigation. In all events, You are responsible for the full amount of any Plan benefits paid as a result of such litigation. This provision shall survive the termination of this Agreement. Section 13.2 Litigation Against You. If litigation or administrative proceedings are begun against You and/or the Plan, You will select and retain counsel, and You will be responsible for all legal fees and costs in connection with such litigation, except as provided in Section 12.2. We will cooperate fully in the defense of litigation arising out of matters relating to this Agreement. This provision shall survive the termination of this Agreement. Section 14 - Mediation In the event that any dispute, claim, or controversy of any kind or nature relating to this Agreement arises between the parties, the parties agree to meet and make a good faith effort to resolve the dispute. If the dispute is not resolved within thirty (30) days after the parties first met to discuss it, and either party wishes to pursue the dispute further, that party will refer the dispute to non-binding mediation under the Commercial Mediation Rules of the American Arbitration Association ("AAA"). In no event may the mediation be initiated more than one year after the date one party first gave written notification of the dispute to the other party. A single mediator engaged in the practice of law, who is knowledgeable about employee benefit plan administration, will conduct the mediation under the then current rules of the AAA. The mediation will be held in Dallas County, Texas or a mutually agreeable site. Nothing herein is intended to prevent either party from seeking any other remedy available at law including seeking redress in a court of competent jurisdiction. This provision shall survive the termination of this Agreement. Section 15 - Miscellaneous Section 15.1 Subcontractors. We can use Our affiliates as subcontractors, or other subcontractors, to perform Our services under this Agreement. We will be responsible for those services to the same extent that We would have been had We performed those services without the use of an affiliate or subcontractor. Section 15.2 Assignment. Except as provided in this paragraph, neither party can assign this Agreement or any rights or obligations under this Agreement to anyone without the other party's written consent. That consent will not be unreasonably withheld. Nevertheless, We can assign this Agreement, including all of Our rights and obligations to Our affiliates, to an entity controlling, controlled by, or under common control with Us, or a purchaser of all or substantially all of Our assets, subject to notice to You of the assignment. Section 15.3 Governing Law. This Agreement is governed by the laws of the State of Texas. Venue for a proceeding brought under this agreement shall be Dallas County, Texas. This provision shall survive the termination of the Agreement. Section 15.4 Entire Agreement. This Agreement, with its exhibits, constitutes the entire agreement between the parties governing the subject matter of this Agreement. This Agreement replaces any prior written or oral communications or agreements between the parties relating to the subject matter of this Agreement. The headings and titles within this Agreement are for convenience only and are not part of the Agreement. Section 15.5 Amendment. Except as may otherwise be specified in this Agreement, the Agreement may be amended only by both parties agreeing to the amendment in writing, executed by a duly authorized person of each party. Section 15.6 Waiver/Estoppel. Nothing in this Agreement is considered to be waived by any party, unless the party claiming the waiver receives the waiver in writing. No breach of the Agreement is considered to be waived unless the non-breaching party waives it in writing. A waiver of one provision does not constitute a waiver of any other. A failure of either party to enforce at any time any of the provisions of this Agreement, or to exercise any option which is herein provided in this Agreement, will in no way be construed to be a waiver of such provision of this Agreement. 18 Section 15.7 Notices. Any notices, demands, or other communications required under this Agreement will be in writing and may be provided via electronic means or by United States Postal Service by certified or registered mail, return receipt requested, postage prepaid, or delivered by a service that provides written receipt of delivery. Section 15.8 Use of Name. The parties agree not to use each other's name, logo, service marks, trademarks or other identifying information without the written permission of the other; provided, however, You grant Us permission to use Your name, logo, service marks, trademarks or other identifying information to the extent necessary for Us to carry out Our obligations under this Agreement (e.g. on EBBS and ID cards). Section 15.9 Producer Compensation. We pay brokers and agents (referred to collectively as "producers") compensation for their services in connection with the sale of Our third party administrative services, in compliance with applicable law. We pay "base commissions" based on factors such as the type of services sold, total amount of administrative fees, group size, and number of employees. These commissions are reflected in the administrative service rate. In addition, We may pay bonuses pursuant to bonus programs established from time to time which are designed to encourage the provision of information regarding new products and provide incentives to achieve production targets, persistency levels, growth goals and other objectives. Bonuses are not reflected in the administrative service fees but are paid from Our general administrative expenses. In general, Our total bonuses are less than 10% of total producer compensation paid but the percentage may be higher in certain situations. It is Our policy not to pay commissions to producers with respect to a product for which the customer is also paying the producer a commission or other fee. Please note We also make payments from time to time to producers for services other than those relating to the sale of services (for example, compensation for services as a general agent or as a consultant). We have taken steps to ensure that producers properly disclose their compensation arrangements to their customers, but We cannot guarantee the producer's compliance. For general information on Our producer payment arrangements, including the approximate percentage of total compensation that total bonus payments comprise, please go to http://www.uhc.com and click on the drop down box for employers under "View Our Programs - Producer Payment Programs." For specific information about the compensation payable with respect to Your particular situation, please contact Your producer. 19 EXHIBIT A - SERVICE FEES This exhibit lists the service fees You must pay Us for Our services during the term of the Agreement. These fees apply for the period from January 1, 2009 through December 31, 2010. You acknowledge that the amounts paid for administrative services are reasonable. Administrative Service Fees - Standard Medical Service Fee $25.25* per Employee per month. *Flex-Share Rewards Program If "Network Savings" for the Agreement period exceeds "Target Savings", an amount will be charged on a quarterly basis equal to 19.1% of the network benefits which exceed the "Target Savings" for the Agreement period. "Network Savings" means the amount of covered charges that would have been payable under the terms of the Plan to a Network Provider, including amounts payable by both the Participant and the Plan if no discount were applicable, minus the amount of covered charges actually paid to the Network Provider, again, including amounts paid by both the Participant and the Plan, based on the applicable rates for fees for services specified in Our provider agreement with that Provider. "Target Savings" for the Plan for the Agreement period is 40% of "Plan Benefits". "Plan Benefits" is the total amount that is paid under the terms of the Plan to network and non-network providers during the Agreement period, including amounts paid by both the Participant and the Plan. The following benefits will not be included in the calculation of the "Network Savings" amount: • benefits paid under the Transplant Benefit Management Program, The Flex-Share Rewards amount will be charged to Your bank account on a quarterly basis. The average total monthly sum of the Standard Medical Service Fee and the Flex-Share Rewards amount will not exceed $39.99 per month per Employee. Administrative Service Fees - Optional and Non-Standard Fees Service Fee for Facility Reasonable Charge Determination and Negotiation .You will pay a fee for Our services, equal to thirty percent (30%) of the amount of reductions obtained through Our efforts. We will bill You for the amounts You owe Us. The bill will reflect reductions obtained during the preceding month and adjustments, if any, from previous months. Service Fee for Shared Savings Program You will pay a fee equal to thirty-five percent (35%) of the "Savings Obtained" as a result of the Shared Savings Program. "Savings Obtained" means the amount that would have been payable to a health care provider, including amounts payable by both the Participant and the Plan, if no discount were available, minus the amount that is payable to the health care provider, again, including amounts payable by both the Participant and the Plan, after the discount is taken. Service Fee for Fraud and Abuse Management You will pay Us a fee equal to thirty-two and five-tenths percent (32.5%) of the gross recovery amount. Service Fee for Claim Recovery Services and Third Party Liability Recovery (subrogation) We will retain thirty-three and one-third percent (33 1/3%) of the gross recovery amount as Our fee. 20 EXHIBIT B - BUSINESS ASSOCIATE ADDENDUM TO ADMINISTRATIVE SERVICES AGREEMENT This Addendum is made to the Administrative Services Agreement ("Agreement") between United HealthCare Insurance Company ("Us" or "We") and City of Denton Health Benefit Plan ("Plan") and is effective on January 1, 2009 ("Effective Date"). 1. Definitions: (i) EPHI: Electronic protected health information as defined in the Security Rule that is created, received, maintained, or transmitted by or on behalf of Plan. (ii) HHS: The United States Department of Health and Human Services. (iii) PHI: Defined in Section I of this Agreement. (iv) Privacy Rule: The Standards of Privacy of Individually Identifiable Health Information at 45 C.F.R. part 160 and part 164, subparts A and E, promulgated under the Health Insurance Portability and Accountability Act. (v) Security Rule: The Security Standards published on February 20, 2003 at 68 Fed. Reg. 8334 et seq. (45 C.F.R. Parts 160, 162 and 164), as hereafter amended. (vi) Capitalized terms used in this Addendum that are defined in the Agreement shall have the respective meanings assigned to such terms in the Agreement. (vii) Those capitalized terms not defined in the Agreement or in this Addendum shall have the meanings set forth in the applicable definitions under the Privacy Rule or Security Rule. General Permissible Uses and Disclosures of PHI. PHI will be used by Us to administer the Plan, to perform under the Agreement or this Addendum, or as permitted under the Agreement or this Addendum. We may also use or disclose PHI: (i) for Our proper management and administration and to fulfill any present or future legal responsibilities; provided, however, that any such disclosures are Required By Law or We have received from the third party written assurances that the information will be held confidentially and used or further disclosed only as required by law or for the purpose for which it was disclosed to the third party; and the third party will notify Us of any instances of which it becomes aware in which the confidentiality of the information has been breached; (ii) to aggregate the PHI as permitted under the Privacy Rule; (iii) to create de-identified data, provided that We de-identify the information in accordance with the Privacy Rule. De-identified information does not constitute PHI, is not subject to the terms and conditions of this Addendum, and is Our Proprietary Business Information; (iv) for research including but not limited to projects for therapeutic outcomes research, and for epidemiological studies. We will obtain and maintain, on behalf of Plan, any consents, authorizations or approvals that may be required by applicable federal or state laws and regulations for use or disclosure of PHI for such purposes. We will maintain the confidentiality of such information as it relates to any individual Participant, provider, or Your business. The research, databases, analyses, and studies are Our Proprietary Business Information; and (v) to create or use Limited Data Sets as permitted under the Privacy Rule. We also may disclose Limited Data Sets to a related entity or to You, provided however, We agree to limit use of the Limited Data Sets to Research, Health Care Operations, or public health purposes and further agree to: (1) not use or further disclose the Limited Data Sets other than as permitted by this Addendum or this Agreement or as otherwise required by law; 21 (2) use appropriate safeguards to prevent use or disclosure of the Limited Data Sets other than as provided for by this Addendum or this Agreement; (3) report to You any use or disclosure of the Limited Data Sets not provided for by this Addendum or this Agreement of which We become aware; (4) ensure that any agents, including a subcontractor, to whom We provide the Limited Data Sets agrees to the same restrictions and conditions that apply to the limited data set recipient with respect to such information; and (5) not identify the Limited Data Sets or contact the individuals. These Limited Data Sets are considered by Us to be Our Proprietary Business Information. Our Obligations under the Privacy Rule. We agree that We shall: (i) not use or further disclose the PHI other than as permitted by this Addendum or the Agreement or as Required by Law; (ii) use appropriate safeguards to prevent use or disclosure of PHI other than as permitted or required by this Addendum or the Agreement; (iii) report to Plan any use or disclosure of any PHI of which We become aware that is not permitted by this Addendum or the Agreement; (iv) mitigate, to the extent practicable, any harmful effect that is known to Us resulting from a use or disclosure of PHI in violation of this Agreement; (v) ensure that any subcontractor or agent to whom We provide any PHI agrees to the same restrictions and conditions that apply to Us with regard to the use and/or disclosure of PHI pursuant to this Addendum; (vi) respond to Individuals' requests for access to PHI in Our possession that constitutes a Designated Record Set in accordance with the Privacy Rule; (vii) incorporate any amendments or corrections to the PHI in Our possession that constitutes a Designated Record Set in accordance with the Privacy Rule; (viii) document disclosures of PHI and information related to such disclosures as would be required to respond to a request by an individual for an accounting of disclosures of PHI in accordance with the Privacy Rule. (ix) provide to Individuals an accounting of disclosures in accordance with the Privacy Rule; (x) accommodate reasonable requests by Individuals for confidential communications in accordance with the Privacy Rule; (xi) make Our internal practices, books and records relating to the use and disclosure of PHI available to the Secretary of HHS for purposes of the Secretary of HHS determining Your compliance with the Privacy Rule; and (xii) except as provided for herein or as required by law, upon termination of this Agreement, return to Plan or destroy the PHI and retain no copies in any form, if feasible. If We determine that returning or destroying the PHI is infeasible, We agree to extend the protections, limitations and restrictions of this section to such PHI and to limit any further uses and/or disclosures of such PHI retained to the purposes that make the return or destruction of the PHI infeasible, for as long as We maintain such PHI. 4. Our Obligations Under the Security Rule. With regard to Our use and/or disclosure of EPHI, effective no later than the compliance date applicable to Plan under the Security Rule (April 20, 2005), We shall: 22 (i) implement administrative, physical, and technical safeguards that reasonably and appropriately protect the confidentiality, integrity, and availability of the EPHI that We create, receive, maintain or transmit on behalf of Plan; (ii) ensure that any and all of Our subcontractors or agents to whom We provide EPHI agree in writing to implement reasonable and appropriate safeguards to protect such EPHI; and (iii) report to Plan any security incident (as defined in 45 CFR Section 164.304) of which We become aware in accordance with Our standard reporting procedures. Plan and Employer-Plan Sponsor Obligations. (i) Plan represents that it has received certification from You that You have amended Your Plan documents (1) to include specific provisions to restrict the use or disclosure of PHI and to ensure adequate procedural safeguards in accordance with the Privacy Rule and (2) to provide that the Plan Sponsor will reasonably and appropriately safeguard EPHI created, received, maintained or transmitted to or by the Plan Sponsor in accordance with the Security Rule. (ii) Plan will not agree, without Our prior written consent, to an Individual's request for a restriction pursuant to 45 CFR 164.522(a) of the Privacy Rule to the extent such restriction may adversely affect Our ability to use and/or disclose PHI under this Addendum or the Agreement. Notwithstanding the preceding sentence, We will accommodate reasonable requests for confidential communication as required under 45 CFR § 164.522(b) of the Privacy Rule. 6. Termination Upon Breach of Provisions Applicable to PHI or EPHI. Any other provision of the Agreement notwithstanding, this Addendum and this Agreement may be terminated by the Plan upon sixty (60) days prior written notice to Us in the event that We materially breach any obligation of this Addendum related to Our use and disclosure of PHI or EPHI and fail to cure the breach within such sixty (60) days period, or if such breach is not reasonably curable within a sixty (60) day period, then the Agreement may be terminated if the cure of such breach has not been commenced by Us within such sixty (60) day period and completed with reasonable diligence. 7. Nothing express or implied in this Addendum is intended to confer, nor shall anything herein confer, upon any person other than the parties and the respective successors or assigns of the parties, any rights, remedies, obligations, or liabilities whatsoever. 8. The terms of this Business Associate Addendum shall survive the termination of this Agreement 50089614 (11/17/08) 23