2008-298sAour doc u men ts\ordinances\08\uhc ordinance.doc
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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
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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
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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.
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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.
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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.
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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.
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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;
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(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:
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(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)
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